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Reassessment proceedings under Section 147 quashed for impermissible change of opinion on share capital transactions ITAT Kolkata quashed reassessment proceedings u/s 147 where AO added 1% commission income on share capital raised by assessee for facilitating ...
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Reassessment proceedings under Section 147 quashed for impermissible change of opinion on share capital transactions
ITAT Kolkata quashed reassessment proceedings u/s 147 where AO added 1% commission income on share capital raised by assessee for facilitating accommodation entries. The original assessment u/s 143(3) had examined identical share capital details through s/133(6) notices to investors and assessed income at NIL. Despite reopening based on alleged accommodation entry information, AO made no addition for that reason but instead added estimated commission income on previously examined transactions. ITAT held this constituted impermissible change of opinion, making reassessment proceedings bad and illegal. Order allowed in favor of assessee.
Issues Involved: Appeal against order u/s 250 of the Income Tax Act, 1961 for AY 2011-12; Condonation of delay in filing appeal.
Summary: The appeal was filed against the order passed u/s 250 of the Income Tax Act, 1961 for AY 2011-12. The appeal was initially found to be time-barred by 9 days, but the delay was condoned after perusing the reasons provided by the assessee. The appeal was admitted for adjudication.
The assessee raised grounds challenging the assessment made u/s 147 of the Income Tax Act, 1961 and the addition of a sum of Rs. 52,68,500 as commission income. The assessee contended that the re-assessment proceedings were bad in law and should be quashed. The AO had made an addition for commission income without addressing the original reason for re-opening the case.
After hearing both parties, the Tribunal observed that the AO had not made any addition based on the original reasons for re-opening the case, which amounted to a change of opinion. Citing a judgment of the Hon'ble Bombay High Court, the Tribunal concluded that the re-assessment proceedings were illegal and deserved to be quashed. The Tribunal allowed the appeal on this legal issue.
As the re-assessment proceedings were quashed, the grounds raised on merits were rendered infructuous. The general ground raised by the assessee required no adjudication. Consequently, the appeal filed by the assessee was allowed.
The judgment was delivered by the Appellate Tribunal ITAT Kolkata on 16th October 2023.
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