2015 (10) TMI 2574 - AT - Income Tax

Tribunal quashes tax assessment, cites Assessing Officer's failure to consider evidence, rules in favor of appellant.

Gee Cee Cycle Balls (PVT) Ltd. Versus Income-tax Officer, Ward 12 (1), New Delhi

Gee Cee Cycle Balls (PVT) Ltd. Versus Income-tax Officer, Ward 12 (1), New Delhi - TMI Issues:1. Validity of the order passed by the Assessing Officer.2. Legality of initiating re-assessment proceedings u/s. 148.3. Addition made u/s. 68 of the Income Tax Act, 1961.4. Lack of opportunity for cross-examination and non-supply of material relied upon by the Assessing Officer.Analysis:1. The appeal was filed against the order passed by the Assessing Officer for the assessment year 2001-02. The appellant contended that the order was bad in law and on facts. The brief facts revealed that the case was reopened based on information from the Investigation Wing regarding accommodation entries. The Assessing Officer observed discrepancies in share capital raised by the appellant and made an addition u/s. 68 of the Act. The appellant challenged this in appeal before the CIT(A), who upheld the addition. The appellant argued that the assessment was reopened on vague information, and all necessary details were submitted. However, the authorities did not conduct an independent inquiry or provide an opportunity for cross-examination.2. The appellant raised objections against the re-assessment proceedings initiated u/s. 148, stating that they were not based on proper application of mind by the Assessing Officer. The appellant argued that the proceedings lacked independent belief formation by the AO and were solely based on general information from the Investigation Wing. The appellant cited various case laws to support the contention that the proceedings were unjustified. The Department, on the other hand, defended the initiation of proceedings based on information received and the failure of the appellant to prove the creditworthiness of the entities involved.3. The addition made u/s. 68 of the Income Tax Act was a key issue in the appeal. The Assessing Officer added a sum of Rs. 5,00,000 to the appellant's income, alleging non-disclosure of material facts and lack of creditworthiness of the entities from which the funds were received. The appellant argued that all necessary documents were submitted to prove the genuineness of the transactions, but the authorities failed to consider them properly. The appellant emphasized that the addition was unsustainable based on the evidence provided and cited relevant case laws to support their position.4. The appellant also raised concerns regarding the lack of opportunity for cross-examination and non-supply of material relied upon by the Assessing Officer. The appellant contended that fundamental principles of natural justice were violated as they were not given a chance to cross-examine witnesses or rebut the evidence against them. The appellant's arguments were supported by legal precedents emphasizing the importance of providing such opportunities in assessment proceedings.In the final judgment, the Tribunal found in favor of the appellant, quashing the re-assessment order and directing the deletion of the addition made u/s. 68. The Tribunal highlighted the failure of the Assessing Officer to independently apply their mind and consider the evidence provided by the appellant. The decision was based on a thorough analysis of the facts, legal principles, and precedents cited by both parties, ultimately leading to the allowance of the appellant's appeal.