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M.A. Projects Pvt. Ltd., New Delhi vs ACIT - (Income Tax Appellate Tribunal) (20 May 2022)

In the absence of fresh tangible material, the action under Section 147 of the IT Act by the AO is not tenable


Direct Taxation

The case of the assessee has been taken up for scrutiny and assessment order under Section 153A read with 143(3) of the Income Tax Act, 1961 (IT Act) was passed. The notice under Section 148 of the IT Act was issued, the representative of the assessee has participated in the assessment proceedings. The assessment order came to be passed by making addition of Rs. 45,00,000 on account of unexplained income from share applicants. As against the assessment order, the assessee has preferred an appeal before the CIT(A). The Learned CIT(A) by order dismissed the appeal filed by the assessee.

The Learned A.O has made an addition of Rs. 45,00,000 under Section 68 of the IT Act, on the ground that the assessee failed to prove the identity and creditworthiness of share applicants i.e. Indlon Hosiery P. Ltd., Multi-tech Semi Conductors P. Ltd. and Oracle M.A Projects. Pvt. Ltd. Cables P. Ltd. The above said information were very well in existence in the hands of the AO when the original assessment order was passed. Therefore, the reopening of assessment was without any fresh tangible material. It is well settled law that, in the absence of fresh tangible material, the action under Section 147 of the IT Act by the AO is not tenable under the law.

In view of the discussion, reopening of the assessment is clearly bad in law and liable to be quashed, accordingly the assessee's grounds of Appeal are allowed and the order of Lower Authorities is set aside, resultantly, additions stands deleted. Appeal of the assessee is allowed.


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