Commissioner of Income Tax -4 v. Independent Media Pvt. Ltd
[Citation -2015-LL-1119-17]

Citation 2015-LL-1119-17
Appellant Name Commissioner of Income Tax -4
Respondent Name Independent Media Pvt. Ltd.
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 19/11/2015
Judgment View Judgment
Keyword Tags reason to believe • reopening of assessment • substantial question of law • unexplained income
Bot Summary: The Assessee filed its return of income on 1st November, 2004 which was processed under Section 143(1) of the Income Tax Act on 23rd February, 2005. On 20th March, 2007, a notice was issued to the Assessee under ITA 108/2015 Page 1 of 4 Section 148 of the Act communicating the reason to believe that income had escaped assessment. A reassessment order was passed by the AO on 18th December, 2007 adding a sum of Rs.2.20 crores as income from undisclosed sources. After the Commissioner of Income Tax affirmed the order of the AO, the Assessee appealed to the ITAT. 5. The ITAT noticed in the impugned order that it had in the case of another Assessee, that had been issued an identically worded notice of reopening of assessment by the same AO, held the reassessment proceedings to be invalid by its order dated 12th October 2011 in ITA Nos.2332-2333/Del/2010 Ltd. v. CIT) which order had been affirmed by this Court in Commissioner of Income-Tax v. Insecticides Ltd. 357 ITR 330. In the said decision it was held by this Court that: ITA 108/2015 Page 2 of 4 the information on the basis of which the Assessing Officer had initiated proceedings under Section 147 of the Act are undoubtedly vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. The Court held that the basic requirement of Section 147 of the Act that AO should apply an mind in order to form reasons to believe that income had escaped assessment had not been fulfilled.


$ * IN HIGH COURT OF DELHI AT NEW DELHI 7. + ITA 108/2015 COMMISSIONER OF INCOME TAX -4, ..... Appellant Through: Mr Kamal Sawhney, Senior Standing Counsel with Mr Raghvendra Singh, Junior Standing Counsel and Mr Shikhar Garg, Advocate. versus INDEPENDENT MEDIA PVT. LTD. ..... Respondent Through: Mr M. P. Rastogi with Mr K. N. Ahuja, Advocates. CORAM: JUSTICE S. MURALIDHAR JUSTICE VIBHU BAKHRU ORDER % 19.11.2015 1. This appeal by Revenue is directed against order dated 19th August, 2014 passed by Income Tax Appellate Tribunal ( ITAT ) in ITA No.352/Del/2009 for Assessment Year ( AY ) 2004-05. 2. question urged by Revenue is whether ITAT was correct in holding that Assessing Officer ( AO ) was not justified in initiating reassessment proceedings under Sections 147/148 of Act? 3. Assessee filed its return of income on 1st November, 2004 which was processed under Section 143(1) of Income Tax Act on 23rd February, 2005. On 20th March, 2007, notice was issued to Assessee under ITA 108/2015 Page 1 of 4 Section 148 of Act communicating reason to believe that income had escaped assessment. It was informed by Director of Income Tax (Investigation) by letter dated 16th June, 2006 that above named company was involved in giving and taking accommodation entries/transactions during AY 2003-04. It was further stated: from information gather by DIT (Inv)-1, New Delhi that Assessee was involved in giving and taking accommodation entries only and represented unsecured money of Assessee company is actually unexplained income of Assessee company. Assessee company has failed to disclose fully and truly all material facts and source of these funds routed through bank accounts of Assessee company. I, therefore, have reasons to believe that income has escaped assessment within meaning of Section 147 of I.T. Act, 1961 for Asstt. Year referred above. 4. reassessment order was passed by AO on 18th December, 2007 adding sum of Rs.2.20 crores as income from undisclosed sources. addition of Rs.4.40 lakhs was made on basis that Assessee had earned commission on such accommodation entries. After Commissioner of Income Tax (Appeals) affirmed order of AO, Assessee appealed to ITAT. 5. ITAT noticed in impugned order that it had in case of another Assessee, that had been issued identically worded notice of reopening of assessment by same AO, held reassessment proceedings to be invalid by its order dated 12th October 2011 in ITA Nos.2332-2333/Del/2010 (Insecticides (India) Ltd. v. CIT) which order had been affirmed by this Court in Commissioner of Income-Tax v. Insecticides (India) Ltd. (2013) 357 ITR 330 (Del). In said decision it was held by this Court that: ITA 108/2015 Page 2 of 4 information on basis of which Assessing Officer had initiated proceedings under Section 147 of Act are undoubtedly vague and uncertain and cannot be construed to be sufficient and relevant material on basis of which reasonable person could have formed belief that income had escaped assessment. In other words, reasons recorded by AO are totally vague, scanty and ambiguous." 6. It has been brought to notice of this Court that same AO has in other cases in Jurisdiction Company Circle 11 (1) passed identical orders for reopening assessment under Section 147/148 of Act, relying on same letter dated 16th June, 2006 of Director of Income Tax (Investigation) although it pertained to different financial years. For instance, identically worded order of reopening of assessment was issued in case of India Terminal Connector Systems Ltd. for AY 2002-03. 7. Recently, this Court by order dated 8th October, 2015 in ITA No.545/2015 (Pr. Commissioner of Income Tax-4 v. G & G Pharma India Ltd.) dealt with similar instance of reopening of assessment by AO based on information received from Director of Investigation without making any effort to discuss materials on basis on which he formed prima facie opinion that income had escaped assessment. Court held that basic requirement of Section 147 of Act that AO should apply mind in order to form reasons to believe that income had escaped assessment had not been fulfilled. 8. As far as present case is concerned, situation is no different. ITAT was, in circumstances, justified in holding initiation of reassessment proceedings was invalid. ITA 108/2015 Page 3 of 4 9. No substantial question of law arises. appeal is dismissed. S. MURALIDHAR, J VIBHU BAKHRU, J NOVEMBER 19, 2015 MK ITA 108/2015 Page 4 of 4 Commissioner of Income Tax -4 v. Independent Media Pvt. Ltd
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