Case Number: ITA 1424/DEL/2021
Appellant: Nishit Fincap P. Ltd., Delhi
Respondent: ITO Ward 18(3), New Delhi
Assessment Year: 2008-09
Case Filed On: 2021-10-11
Order Type: Final Tribunal Order
Date of Order: 2022-04-11
Pronounced On: 2022-04-11
The case of Nishit Fincap P. Ltd. vs. ITO Ward 18(3), New Delhi involves an appeal by the assessee challenging the validity of reassessment proceedings for the assessment year 2008-09. The appellant argued that the reassessment was initiated without proper application of mind and the necessary legal provisions were not followed.
Nishit Fincap P. Ltd., a company engaged in the business of sale/purchase of shares and providing finance, filed its return of income on 28.09.2008 declaring a total income of Rs. 18,230/-. The return was selected for scrutiny, and the assessment was completed under section 143(3) of the Income Tax Act on 03.12.2010, determining a total income of Rs. 48,360/-. The assessment included disallowances out of preliminary expenses, general expenses, and disallowance under section 14A read with Rule 8D.
Subsequently, the case was reopened under section 147 of the Act based on information from the Investigation Wing regarding alleged accommodation entries provided by Shri Surender Kumar Jain, an entry operator. The Assessing Officer (AO) issued a notice under section 148, and the reasons for reopening were communicated to the assessee. The AO made an addition of Rs. 15 lakhs as unexplained cash credits under section 68 and an additional Rs. 27,000/- as expenses for obtaining these entries.
The assessee challenged the reassessment proceedings on several grounds, including:
The Income Tax Appellate Tribunal (ITAT) examined the arguments and evidence presented by both sides. The Tribunal noted that the AO had reopened the assessment by invoking clause (b) of Explanation-2 to section 147, which is applicable when no assessment has been made. However, in this case, an assessment under section 143(3) had already been completed.
The Tribunal found that the AO had not applied his mind independently and relied solely on the information from the Investigation Wing without verifying the assessment records. Furthermore, the reasons recorded did not specify which material facts were not disclosed by the assessee, failing to satisfy the statutory requirements under section 147.
The Tribunal concluded that the reassessment proceedings were not valid due to the improper application of the legal provisions and the lack of independent verification by the AO. The reassessment proceedings were quashed, and the appeal filed by the assessee was allowed.
Order: The appeal filed by the assessee is allowed.
This case highlights the importance of adherence to legal procedures and proper application of mind in reassessment proceedings under the Income Tax Act.
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