2020 (11) TMI 222 - AT - Income Tax

Tribunal voids reassessment under Income Tax Act section 148 for lack of evidence.

Akik Marketing India Pvt. Ltd. Versus Income Tax Officer, Ward : 2 (1), New Delhi

Akik Marketing India Pvt. Ltd. Versus Income Tax Officer, Ward : 2 (1), New Delhi - TMI Issues involved:Challenge to initiation, continuation, and conclusion of reassessment proceedings; Jurisdiction of reassessment proceedings; Approval granted by Pr. CIT; Addition under section 68; Cross-examination of witnesses; Source of source requirement under section 68; Addition on account of commission under section 69.Analysis:1. Reopening of Assessment Proceedings:The appellant challenged the initiation of reassessment proceedings under section 148 of the Income Tax Act, 1961. The appellant argued that the reasons recorded lacked independent application of mind and were based on vague and non-specific information. The appellant contended that the Assessing Officer did not have valid reasons to believe that income had escaped assessment. The appellant cited various legal precedents to support the argument that the reasons recorded were merely based on suspicion rather than belief. The appellant also raised concerns about the mechanical approval granted by the Principal Commissioner of Income Tax (Pr. CIT) without proper application of mind. The tribunal agreed with the appellant, noting that the reasons recorded did not provide specific details or evidence to justify the reopening of the assessment. The tribunal emphasized the importance of clear, unambiguous, and evidence-based reasons for initiating reassessment proceedings. It held that the reassessment was invalid and void ab initio due to the lack of proper satisfaction recorded by the Assessing Officer and the mechanical nature of the approval by the Pr. CIT.2. Merits of the Appeal:Given the invalidation of the reassessment proceedings, the tribunal did not delve into the merits of the additions made by the Assessing Officer under sections 68 and 69 of the Act. The tribunal noted that since the assessment order itself was quashed due to procedural irregularities, there was no need to address the substantive issues raised by the appellant regarding the additions made to the appellant's income. Consequently, the tribunal allowed the appeal of the assessee solely on the legal issue related to the validity of the reassessment proceedings.This detailed analysis of the judgment highlights the procedural and jurisdictional aspects of the case, focusing on the challenges to the initiation of reassessment proceedings and the subsequent invalidation of the assessment order. The tribunal's decision underscores the importance of adherence to legal requirements and the necessity of clear and evidence-based reasons for reopening assessments under the Income Tax Act.