2016 (6) TMI 1144 - AT - Income Tax

Validity of reopening of assessment - Held that - The reasons recorded in the case of the assessee that assessment has been reopened on the basis of some opinion received from ACIT, Central Circle-19 on the basis of survey operations conducted in the case of S.K. Gupta group. The basic requirement is that the Assessing Officer must apply his mind to the material in order to form reasons to believe that the income of the assessee has escaped assessment. Thus we hold the reopening of assessment in the case of the assessee under appeal before us to be invalid. Accordingly, the notice issued u/s 148 of the Act is quashed and the consequential assessment order passed in pursuance thereto is also quashed. - Decided in favour of assessee

Summary

Issues:
Validity of assessment order made by Assessing Officer and assumption of jurisdiction u/s 147.

Analysis:
The appeal was against the order of CIT(A)-XXXIII, New Delhi dated 7th June, 2013, for the assessment year 2004-05. Grounds 1 & 2 of the appeal challenged the rejection of the appellant's contention regarding the assessment order's legality and the jurisdiction assumed under section 147 by the Assessing Officer. During the hearing, the appellant's counsel argued that the issue was similar to a previous ITAT decision in the case of USG Buildwell Pvt.Ltd. The reasons recorded in both cases were found to be identical, leading to the conclusion that the decision in the USG Buildwell Pvt.Ltd. case was applicable. The ITAT in the USG Buildwell Pvt.Ltd. case had held that the reopening under section 147 was not valid due to the Assessing Officer not applying their mind to the material before concluding that income had escaped assessment.

Upon comparing the reasons recorded in both cases, it was observed that they were almost identical, indicating a lack of independent application of mind by the Assessing Officer. The ITAT agreed with the appellant's counsel that the decision in the USG Buildwell Pvt.Ltd. case was directly applicable. Consequently, the reopening of assessment in the present case was deemed invalid, leading to the quashing of the notice issued under section 148 and the consequential assessment order. As a result, the appeal of the assessee was allowed. With the assessment order being quashed, other grounds raised by the assessee against the addition sustained by the CIT(A) were no longer relevant for adjudication.

In conclusion, the ITAT held that the assessment order made by the Assessing Officer was invalid due to the lack of proper application of mind in initiating proceedings under section 147. The decision in a similar case was relied upon to support the invalidation of the assessment order, leading to the quashing of the notice and the assessment itself. The appeal of the assessee was allowed based on the findings regarding the invalidity of the assessment process.