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II. Direct Taxes Case Law:
1. M/s. Neelkanth Plywood Pvt. Ltd. Vs. ITO, I.T.A. No. 6702/Del/2018, Date of Order: 21.08.2019, ITAT – Delhi
Issue:
Whether AO is justified in reopening the case u/s 147 of the Act,
on the basis of report of investigation wing without independent
application of mind?
Held: No
Brief Facts:
The assessee is a company and filed its return of income and same is
processed u/s 143(1). Subsequently the AO received information from
Investigation Wing of the department that a search operation was carried
out in the case of Sh. Surender Kumar Jain group of cases, who are
known as entry operators. During the course of search and post search
enquiries it was established that the said group is involved in
providing accommodation entries to various persons whose names were
named in the report. The name of the assessee company also appears in
the said list as one of the beneficiaries. Thereafter the AO reopened
the assessment u/s. 147 and notice u/s. 148 was issued to the assessee.
Held
Hon’ble ITAT held that “the reopening on the basis of report of
investigation wing without independent application of mind by the
Assessing Officer is not valid. Accordingly, the reassessment
proceedings which were based on the report of the investigation wing and
without independent application of mind by the Assessing Officer have
been held to be illegal. Since the Assessing Officer in the instant case
has reopened the assessment on the basis of report of the investigation
wing and there appears to be no independent application of mind by the
Assessing officer for reopening of the case, therefore, the reassessment
proceeding initiated by the Assessing Officer are not proper. I,
therefore, hold that the reassessment proceeding initiated by the
Assessing Officer is illegal and accordingly the subsequent proceedings
also become illegal and void”.
Hence, the appeal was held in favour of the assessee and against the revenue.
(Please click here for judgment)
2. Smt. Sunita Bhagchandka Vs. ACIT, I.T.A. No. 3447/Del/2016, Date of Order: 19.08.2019, ITAT – Delhi
Issue:
Whether AO is justified in assuming jurisdiction u/s 153C on the
basis of documents unearthed during search, which does not indicate
existence of any unaccounted income?
Held: No
Brief Facts:
The assessee is an individual earning income from house property and
income from other sources. During a search & seizure on M2K group
companies, a bank certificate issued by bank confirming the bank balance
and credentials of the assessee found. Based on the impugned bank
certificate Ld. AO recorded the satisfaction and assume jurisdiction u/s
153C of the Income Tax Act, 1961. Further Ld. AO made addition of
shares received by assessee as gift from her sister-in-law.
Held
It is held that bank certificate seized during the search operation
does not hold any information about undisclosed income of assessee.
Apparently, that bank account clearly shows only the bank balance of
that bank account. Further it is not the case where assessee does not
disclosed such bank account in her Return of Income. Ld. AO does not
produce any evidence which can prove that the bank certificate found
during the search of third party is incrementing in the nature. Hon’ble
ITAT held that “documents found during the course of search must give
some indication about the undisclosed income of the assessee. The
impugned certificate did not give any indication about the fact of gift
of the shares, which are alleged to be undisclosed income of the
assessee. In view of this, we do not have any hesitation in holding that
the impugned bank certificate is not an incriminating document based on
which the concluded assessment in the case of the assessee can be
disturbed. In view of this according to us, we hold that no addition can
be made in the hands of the assessee in absence of any incriminating
evidence leading to any unaccounted income unearthed during the course
of search”.
Hence, the appeal was held in favour of the assessee and against the revenue.
(Please click here for judgment)
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