Reopening notice u/s 148 on wrong presumption that assessee not filed return of income quashed.

Reopening notice u/s 148 on wrong presumption that assessee not filed return of income quashed by Tribunal as non application of mind

ABCAUS Case Law Citation
ABCAUS 3423 (2020) (11) ITAT

Important case law relied upon by the parties:
Pr. CIT vs. RMG Polyvinyl (2017) 83 taxmann.com 348 (Delhi)/ 396 ITR 5

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming order of the Assessing Officer of passing order u/s 147 of the Income Tax Act, 1961(the Act).

The case of the assessee was reopened u/s 147 of the Act after taking approval of appropriate authorities. 

A notice u/s. 148 of the Act was issued in response to which the assessee filed its return of income electronically for the relevant assessment year in dispute.

The assessee had shown commission income on retail cash sales of textile. It assessee submitted that the goods goods of other manufacturers were sold on cash to pheri wala and suppliers were paid by cheques.

The AO asked the assessee to furnish the details of the person from whom purchases were made and also asked to furnish the name and address of the persons pheri wala from whom the sales were made.    

The assessee filed copy of purchase bills. Apart from the purchase bill the assessee also furnished the copies of sales bills. However, name and address of pheri wala were not filed.

However, the AO was of the view that entire transaction was bogus and cash deposits in the bank was from undisclosed sources and therefore, he made the addition of the entire credit in the bank account which was related to the earning of commission income.

Before the Tribunal, the assessee raised the legal issue of assumption of jurisdiction u/s 147 of the Act by the  Assessing Officer which was bad in law, because the AO had not applied his mind before issuing the notice u/s  148 of the Act by stating that assessee had not filed  return of income for the relevant assessment year meaning thereby before issue of notice u/s 148 of the  Act, the Assessing Officer had not applied his mind,  therefore, the reassessment framed by the AO was without  jurisdiction,  bad in law and without application of mind and therefore, was liable to be quashed.

The assessee submitted that the original return was duly filed in accordance with provisions of section 139(1) of the Act and the fact was stated by the Assessing Officer in the assessment order also.

The assessee relying on the decision of the Hon’ble Delhi High Court argued that the reassessment be declared as bad in law and accordingly be cancelled.

The Tribunal opined that the reasons recorded by the Assessing Officer were based on presumption and without application of mind by stating therein that assessee  had not filed its return of income whereas as per the evidences produced by the assessee established that the assessee had filed the return of income for the assessment year in dispute.

Therefore, the Tribunal following the decision of the Hon’ble High Court, the Tribunal allowed the appeal in favour of the assessee by declaring the reassessment bad in law and quashed it.  

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