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2019 (4) TMI 1891 - AT - Income TaxValidity of reopening of assessment u/s 147 - information received from the Investigation Wing of the department - assessee has paid capitation fee/donation of ₹ 18 lakhs over and above the regular fees in cash to Santosh Medical College, Ghaziabad for his daughter - HELD THAT - Instead of issuing notice u/s 148 of the Act and reopening assessment, the Assessing Officer could have issued notice u/s 133(6) of the Act and asked the assessee to furnish the details of cash paid, if any, as capitation fee to Santosh Medical College. A perusal of the reasons clearly show that the Assessing Officer has not independently applied his mind and has simply extracted the information received from the DDIT, INV Unit VI, New Delhi dated 11.02.2015. In fact, the Assessing Officer himself has observed that the donation in cash is likely to be unaccounted and disclosed. In our considered view, reopening cannot be done on suspicion unless the Assessing Officer has reason to believe that income has escaped assessment - assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law and assessment so framed deserves to be quashed - Decided in favour of assessee.
Issues:
Challenge to the validity of notice u/s 148 of the Income-tax Act, 1961 and jurisdiction of the assessment order under section 147. Challenge to additions on merits. Analysis: The appeal was filed by the assessee against the order of the Commissioner of Income Tax [Appeals] pertaining to the assessment year 2013-14. The assessee challenged the validity of the notice issued under section 148 of the Income-tax Act, questioning the jurisdiction of the assessment order under section 147. Additionally, the assessee challenged the additions made on merits. The Assessing Officer had received information regarding the payment of capitation fee/donation in cash to a medical college over and above the regular fees. The notice u/s 148 was issued based on this information. The reasons for reopening the assessment indicated the receipt of cash donations by the parents of students for admission to medical courses. The Tribunal noted that the Assessing Officer could have requested information under section 133(6) instead of reopening the assessment solely based on the received information. The Tribunal observed that the Assessing Officer did not independently apply his mind and merely relied on information from the Investigation Wing. It was noted that reopening an assessment cannot be done solely on suspicion; there must be a reason to believe that income has escaped assessment. The Tribunal cited a case where the Delhi High Court observed that the initiation of reopening the assessment without examining the filed return was erroneous. The Tribunal also referred to a case where the assessment was reopened for verification purposes, which was deemed invalid as it lacked a crucial link between the information and the belief of income escapement. In light of the judicial decisions and the facts of the case, the Tribunal held that the assumption of jurisdiction by issuing the notice u/s 148 was unlawful. Consequently, the assessment order was set aside, and Ground Nos. 1 to 4 of the appeal were allowed. Since the assessment order was quashed, the Tribunal did not delve into the merits of the case. As a result, the appeal filed by the assessee was allowed, and the assessment order was pronounced to be quashed on 26.04.2019.
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