2016 (3) TMI 1344 - AT - Income Tax

Validity of Reopening u/s. 148 - Non independent application of mind by AO - lacking tangible material / reasonable cause and justification - HELD THAT - AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation) New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. See PR. COMMISSIONER OF INCOME TAX-4 VERSUS G & G PHARMA INDIA LTD. 2015 (10) TMI 754 - DELHI HIGH COURT - Decided in favour of assessee

Summary

Issues:
Validity of Reopening u/s. 148

Analysis:
The appellant challenged the reopening of assessment u/s. 147, arguing that the Assessing Officer's action lacked tangible material, reasonable cause, and justification. The appellant contended that there was a total lack of clarity on the nature of the transaction in the reasons recorded. The appellant cited a High Court decision in support of their argument. The Tribunal found that the AO had not applied his mind independently before issuing the notice u/s. 148. The reasons recorded were vague and lacked tangible material, rendering the reopening invalid. Citing the precedent set by the High Court decision, the Tribunal ruled in favor of the appellant, quashing the reassessment proceedings.

Conclusion:
The Tribunal decided the legal issue in favor of the Assessee, quashing the reassessment proceedings based on the lack of independent application of mind by the AO. The Tribunal followed the High Court precedent and allowed the appellant's appeal on the grounds of the invalidity of the reopening under section 147. The other issues were not addressed as the reassessment proceedings were quashed.