2023 (6) TMI 261 - ITAT HYDERABAD

Validity of reopening of assessment u/s 147 - assessment beyond a period of 4 years - mandation of recording satisfaction - HELD THAT:- From a reading of the reasons for belief of escaping the income and reopening of the assessment which are reproduced hereinabove, it is not possible for us to decipher that the AO has recorded that there was any failure on the part of the assessee to disclose fully and truly all the material facts. AO is conspicuously silent on the above said aspect.

Once the AO has not mentioned that the assessee has failed to disclose fully and truly all material facts, necessary for completion of the assessment, the re-opening cannot be made in the eyes of law and we are in agreement with the decision cited by AR in the case of Bhor Industries [2003 (2) TMI 8 - BOMBAY HIGH COURT]and PCIT Vs. Lanco Hills[2022 (12) TMI 802 - TELANGANA HIGH COURT]

Thus reopening made by the AO is not in accordance with the law and the consequential assessment made by the AO is also bad in law. A conclusion may be drawn that the reopening was made beyond a period of 4 years without recording satisfaction by the CIT.

The satisfaction/approval reproduced hereinabove have been accorded by the authorities in a mechanical manner on 19.03.2011, without looking into the proposal dt. 26.03.2011 by the ACIT and without considering the proposal of the AO dt.19.03.2012. Firstly, there was no reason for the ACIT to recommend the case of the AO for reopening u/s 147 - CIT was duty bound to independently apply his mind and come to the satisfaction that the said case was a fit case for reopening of the assessment beyond a period of 4 years.

The satisfaction as contemplated u/s 151 of the Act is not an empty formality as the authorities have to apply their mind and record satisfaction. When the authorities were not oblivious to the date of proposal then it cannot be said that they have applied their mind or considered the proposal of the AO in its right earnest. In our view, if the officers have not even seen the date when it was proposed by the AO, the question of examining other record at the time of recording the satisfaction does not arise and hence, we can safely presume that the CIT has not applied his mind to the proposal of the AO while recording the satisfaction - Decided in favour of assessee.