ITAT Quashes Reopening Due to Incorrect Facts and Absence of Evidence

The Income Tax Appellate Tribunal (ITAT), Chandigarh, has quashed the reopening of the assessment and deleted an addition of Rs 30,70,400, due to incorrect facts and lack of evidence.

The assessee, Shri Naresh Kumar, filed its return of income, which was processed under section 143(1). The case was later reopened based on information received from the Investigation Wing. As per this information, the assessee had received Rs 30.40 lakh from a person who was found to be involved in giving accommodation entries. Therefore, the AO issued notices under section 148.

Since the assessee did not respond to notices under section 148 or furnish details, the AO added a 1% commission of Rs 30.40 lakhs (Rs 30,70,400). The CIT(A) also upheld the AO’s Decision. Therefore, the assessee approached the ITAT.

The assessee submitted that sales were supported by invoices and had already been offered to tax.

The Tribunal noted that the reopening was done on the wrong facts, as the AO incorrectly claimed that no return was filed. The tribunal held that the AO incorrectly applied clause (a) of Explanation 2 to Section 147, which relates to the deemed case of escapement of income.

The Tribunal observed that there was no proof showing that the transactions were bogus. Further, the sales were already taxed, and there was no cash deposit by the assessee. Due to a lack of evidence and wrong facts, the ITAT quashed the reassessment proceedings and deleted the additions.