2018 (8) TMI 594 - AT - Income Tax

Tribunal supports quashing notice & deletion of additions due to lack of evidence.

ITO, Ward 19 (2), New Delhi Versus Sh. Sajjan Kumar Goel

ITO, Ward 19 (2), New Delhi Versus Sh. Sajjan Kumar Goel - TMI Issues Involved:1. Quashing of notice issued under Section 148 of the Income-tax Act, 1961.2. Deletion of addition of Rs. 1 crore made by the Assessing Officer.3. Deletion of addition of Rs. 5,00,000/-.Issue-wise Detailed Analysis:1. Quashing of Notice Issued under Section 148:The Revenue argued that the CIT(A) erred in quashing the notice issued under Section 148 based on information received from the Directorate of Revenue Intelligence (DRI), Mumbai. The assessee's original return declared an income of Rs. 1,73,980/-. The Assessing Officer initiated proceedings under Section 147, issuing a notice under Section 148 based on information that the assessee financed Rs. 1 crore in cash for imports made by a non-existent firm. The CIT(A) quashed the reassessment proceedings, stating that the belief formed by the Assessing Officer was not bonafide and based on vague, irrelevant, and non-specific information. The Tribunal upheld the CIT(A)'s decision, noting that the Assessing Officer did not have concrete evidence or attach relevant statements to support the reasons recorded for reopening the assessment.2. Deletion of Addition of Rs. 1 Crore:The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 1 crore made by the Assessing Officer based on the assessee's statements before the DRI. The Assessing Officer added Rs. 1 crore to the assessee's income, citing the assessee's admission of financing the amount for imports. However, the assessee retracted his statement, and Mr. Shri Bhagwan Tulsian, the alleged recipient, also denied any financial dealings with the assessee. The CIT(A) found no independent evidence to corroborate the financing transaction and concluded that the addition was based on mere statements without supporting evidence. The Tribunal agreed with the CIT(A), emphasizing that the statements were retracted and lacked corroborative evidence.3. Deletion of Addition of Rs. 5,00,000/-:The Revenue argued that the CIT(A) erred in deleting the addition of Rs. 5,00,000/- on account of profit earned from the alleged financing. The Assessing Officer had added this amount, assuming the assessee earned profit from the Rs. 1 crore financing. The CIT(A) deleted the addition, reasoning that since the alleged financing transaction did not occur, there could be no profit. The Tribunal upheld this decision, noting that the addition was hypothetical and unsupported by evidence.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions to quash the notice under Section 148 and delete the additions of Rs. 1 crore and Rs. 5,00,000/-. The Tribunal emphasized the lack of concrete evidence and the retraction of statements by the assessee and the alleged recipient, Mr. Shri Bhagwan Tulsian. The Tribunal found no basis for the Assessing Officer's actions and concluded that the CIT(A) had rightly adjudicated the issues.