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Issues involved: Validity of assessment reopened u/s 147 of the Income Tax Act.
Summary: The appeal was filed against the order of the Commissioner of Income Tax (Appeals)-II, Baroda. The main ground of appeal was the validity of the assessment reopened u/s 147 of the Act. The Assessing Officer had recorded reasons for reopening the assessment based on discrepancies in the income declared by the assessee. The authenticity of the particulars of income furnished by the assessee was doubted, leading to the reopening of the assessment. The Tribunal found that the reasons recorded for reopening the assessment were not challenged by the Departmental Representative. It was noted that the assessment was reopened to verify the particulars provided by the assessee in the original return of income. However, no new material or information was presented to support the belief that income had escaped assessment. The Tribunal emphasized that the power to reopen assessments under section 147 is not a substitute for the regular assessment procedure under section 143(2) of the Act. Referring to legal precedents, the Tribunal highlighted that the reason to believe must be concrete and reliable, not based on mere suspicion. The reopening of assessments should not be for mere investigation or to find out the probability of escaped income. In this case, the Tribunal concluded that the assessment was reopened to find out the probability of escaped income, which is impermissible in law. Therefore, the Tribunal canceled the re-assessment order, allowing the appeal of the assessee. As a result of this decision, the other grounds of appeal raised by the assessee were considered moot. The Tribunal refrained from adjudicating on those grounds. Ultimately, the appeal of the assessee was allowed, and the impugned re-assessment order was canceled.
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