Income Tax, Issue Update

Issue examined under original assessment proceeding: Whether re-opening in such case is justified

Case: Nishit Fincap Pvt Ltd vs ITO, Delhi ITAT

Facts

  • The original assessment was framed under section 143(3) of the Income tax Act, 1961. Subsequently, the Assessing Officer came to notice that the Assessee Company had received accommodation entries to the tune of Rs. 38 lakhs during the year under consideration. This was pursuant to the information received from the Investigation Wing and on the basis of the report of the Investigation Wing notice under section 148 of the Act was issued and served upon the Assessee.

Key points

  • Reliance was placed on the decision of the Hon’ble Bombay High Court Court in the case of Marico Ltd., wherein it was concluded that the reasons in support of the impugned notice were the very issue in respect of which the Assessing Officer had raised the query dated 25.09.2017 during the assessment proceedings and the Assessee had responded to the same by its letters dated 10.12.2017 and 21.12.2017 justifying its stand. The non-rejection of the explanation in the Assessment Order would amount to the Assessing Officer accepting the view of the Assessee, thus taking a view/ forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore, would be completely without jurisdiction in the present facts. Accordingly, the impugned notice dated 27.03.2019 was quashed and set-aside.
  • Hence, the notice under section 148 was set aside and assessment order framed pursuant to such notice was, accordingly, quashed.

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