Tribunal dismisses Revenue's appeal, upholds CIT(A)'s decision on Section 68 additions, emphasizes procedural compliance.

ITO, Ward 13(1), New Delhi Versus M/s. NC. Cables Ltd.

ITO, Ward 13(1), New Delhi Versus M/s. NC. Cables Ltd. - TMI Issues Involved:
1. Reopening of Assessment under Section 148.
2. Addition of Share Application Money and Loan under Section 68.
3. Commission Paid for Accommodation Entries.
4. Compliance with Section 151 for Reopening Assessment.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 148:
The assessee originally filed a return declaring a loss, which was accepted. Subsequently, the assessment was reopened under Section 148 based on information from the Investigation Wing, indicating the assessee received accommodation entries from entry operators. The assessee challenged the reopening, arguing that more than four years had passed since the original assessment, and there was no failure to disclose material facts. The Tribunal found that the reasons recorded for reopening were based on a report from the Investigation Wing without independent verification by the Assessing Officer (AO). The Tribunal held that the reopening was invalid as the Commissioner merely wrote 'approved' without recording satisfaction as required under Section 151.

2. Addition of Share Application Money and Loan under Section 68:
The AO made additions of Rs. 1 crore for share application money and Rs. 35 lakhs for loans, citing lack of identity, creditworthiness, and genuineness of the transactions. The CIT(A) deleted these additions, noting that the assessee had provided substantial evidence, including confirmations, bank statements, and tax returns of the creditors and shareholders. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO did not conduct any independent investigation and relied solely on the Investigation Wing's report. The Tribunal referenced the Delhi High Court's rulings, which distinguished between cases where the AO conducted proper inquiries and those where the AO made additions based on presumptions without sufficient inquiry.

3. Commission Paid for Accommodation Entries:
The AO also added Rs. 2,70,000 as commission paid for obtaining accommodation entries. The CIT(A) deleted this addition, and the Tribunal upheld the deletion, as it was a consequential addition based on the primary additions under Section 68, which were already deleted.

4. Compliance with Section 151 for Reopening Assessment:
The Tribunal scrutinized the compliance with Section 151, which mandates satisfaction of the Commissioner for reopening assessments beyond four years. The Tribunal found that the Commissioner merely approved the reopening without recording any satisfaction, rendering the reopening invalid. The Tribunal referenced the Mumbai ITAT's decision in Amarlal Bajaj, which emphasized the necessity of the Commissioner applying his mind and recording satisfaction before approving reopening.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of additions under Section 68 and the consequential commission addition. The Tribunal also allowed the assessee's cross-objection, declaring the reopening of the assessment invalid due to non-compliance with Section 151. The judgment emphasizes the necessity of proper inquiry and adherence to procedural safeguards in reopening assessments.