2011 (10) TMI 525 - AT - Income Tax

Summary

Issues Involved:
1. Validity of notice issued u/s 148 of the Income-tax Act.
2. Reopening of assessment u/s 147 of the Income-tax Act.
3. Application of mind by the Assessing Officer while recording reasons for reopening.

Summary:

1. Validity of Notice Issued u/s 148:
The Revenue contended that the learned Commissioner of Income-tax (Appeals) erred in invalidating the notice issued u/s 148, ignoring that the case was reopened u/s 147 based on information from the investigation wing. The Commissioner of Income-tax (Appeals) held that the Assessing Officer did not independently verify the information received before issuing the notice, thus invalidating the notice.

2. Reopening of Assessment u/s 147:
The only issue for consideration was the reopening of assessment u/s 147. The assessee filed a return of income on October 29, 2001, which was processed u/s 143(1). Information from the investigation wing indicated money-laundering activities involving the assessee. The Assessing Officer issued a notice u/s 147 on March 27, 2008, without conducting an independent inquiry, leading to the reopening of the assessment. The Commissioner of Income-tax (Appeals) found that the Assessing Officer did not apply his mind independently and relied solely on the investigation wing's report, thus declaring the reassessment proceedings as void.

3. Application of Mind by the Assessing Officer:
The Revenue argued that the Assessing Officer applied his mind while recording reasons for reopening the assessment. The assessee contended that there was no independent application of mind by the Assessing Officer. The Tribunal noted that the Assessing Officer recorded detailed reasons based on the investigation wing's report but did not conduct an independent inquiry. However, the Tribunal found that the reasons recorded were exhaustive and specific, indicating that the Assessing Officer had applied his mind. The Tribunal upheld the reopening of the assessment, finding a nexus between the information received and the reasons recorded.

Conclusion:
The Tribunal concluded that the Assessing Officer was justified in reopening the assessment and set aside the matter to the Commissioner of Income-tax (Appeals) to decide the appeal on merits. The appeal filed by the Revenue was allowed.