2016 (5) TMI 1347 - AT - Income Tax

Validity of reopening of assessment - non-independent application of mind by A0 - Held that - The so-called reasons recorded for reopening the assessment do not evince any independent application of mind by the AO to the material before him, i.e., the information from the Investigation Wing, much less any independent arrival by the AO, at a belief on the basis of such material before him, that income had escaped assessment. In fact, the assessment order and even the impugned order endorse this fact. See CIT vs. SFIL Stock Broking Ltd. 2010 (4) TMI 102 - DELHI HIGH COURT Therefore, the assessee s grievance by way of the additional ground is justified and it is accepted as such. Accordingly, the very assumption of jurisdiction by the AO u/s 147/148 of the Act, and the entire reassessment proceedings, culminating in the impugned order are quashed. - Decided in favour of assessee

Summary

Issues Involved:
1. Justification of upholding the assessment order by CIT(A)
2. Consideration of photocopy of benama as evidence of investment
3. Alleged purchase of share in land by Mr. Karanvir Verma
4. Legality of notice u/s 148 for reopening the case

1. Justification of upholding the assessment order by CIT(A):
The appellant contested that the CIT(A) failed to pass a speaking order, which is legally flawed and prejudicial to the appellant. The appellant argued against the findings of the AO regarding the photocopy of benama as evidence of investment, emphasizing the absence of the appellant's physical presence during the execution of the deed. The appellant also disputed the alleged purchase of a share in land by Mr. Karanvir Verma, supported by Mr. Verma's statement denying any such transaction. The AO was criticized for making additions based on a conveyance deed without Mr. Verma's knowledge or signature. The appellant further accused the AO of not considering the case facts and submissions, relying solely on the photocopy of benama without Mr. Verma's signature.

2. Consideration of photocopy of benama as evidence of investment:
The appellant raised concerns about the validity of using a photocopy of benama as evidence of investment without the appellant's physical presence or signature on the agreement. The appellant argued that the AO's reliance on this document for making additions to the assessment was unjustified and lacked proper evidence to support the claim of purchase or sale of property. The appellant emphasized the importance of authentic documentation and the need for the AO to present substantial evidence beyond a mere photocopy.

3. Alleged purchase of share in land by Mr. Karanvir Verma:
The AO reopened the completed assessment based on information suggesting that Mr. Karanvir Verma purchased a share in land. However, the appellant challenged this assertion, presenting Mr. Verma's statement denying any such purchase. The appellant highlighted discrepancies in the information provided to the AO and emphasized the lack of concrete evidence supporting the claim of Mr. Verma's involvement in the alleged transaction. The appellant questioned the basis for reopening the assessment and the lack of independent verification by the AO.

4. Legality of notice u/s 148 for reopening the case:
The appellant contested the legality of the notice issued under section 148, arguing that it was invalid and void ab initio due to a lack of satisfaction by the AO while reopening the case. The appellant claimed that the case was reopened on borrowed satisfaction, which is impermissible under the law. The appellant sought the cancellation of the notice, emphasizing the absence of proper justification for reopening the assessment and the violation of legal procedures in initiating the reassessment proceedings.

In conclusion, the Tribunal ruled in favor of the appellant, quashing the assumption of jurisdiction by the AO under sections 147/148 of the Income Tax Act. The reassessment proceedings were deemed invalid due to the lack of independent application of mind by the AO and the absence of a valid basis for reopening the assessment. The appeal was allowed, and the entire reassessment process was annulled.