2016 (4) TMI 995 - AT - Income Tax

Reopening of assessment - Held that - The reasons to believe recorded by the Assessing Officer in the present case to initiate the proceedings under sec. 147 of the Act without application of his own mind on the information received were not as per the requirement of the provisions of the law laid down under sec. 147 of the Act, hence, the initiation of the proceedings was not valid and nor the assessment made in furtherance to the said initiation of the proceedings. The assessment framed under sec. 147 read with 143(3) of the Act in the present case in question is thus held as void-ab-initio - Decided in favour of assessee

Summary

Issues involved:
Validity of assessment under sec. 147 of the Income-tax Act, 1961 based on borrowed satisfaction from DIT (Inv), New Delhi.

Detailed Analysis:

Issue 1: Validity of assessment under sec. 147 of the Income-tax Act, 1961
- The appeal challenged the initiation of reopening proceedings by the Assessing Officer under sec. 147 based on information from DIT (Inv), New Delhi.
- The reasons for reopening alleged that an amount had escaped assessment, leading to the addition of a specific sum to the total income of the assessee.
- The appellant contended that the initiation was invalid as it lacked the Assessing Officer's independent application of mind, relying on "borrowed satisfaction" from the Investigation Wing.
- The Learned AR highlighted discrepancies in the reasons recorded and cited relevant case laws to support the argument.
- The Learned Senior DR defended the authorities' actions, stating that the Assessing Officer had indeed applied his mind before initiating the proceedings.
- The Tribunal examined recent decisions of the jurisdictional High Court and concluded that the Assessing Officer failed to apply his own mind to the information, rendering the initiation of proceedings invalid.
- The Tribunal found the assessment under sec. 147, along with the subsequent additions, as void-ab-initio due to the lack of proper application of mind by the Assessing Officer.
- Consequently, the grounds questioning the validity of the addition made by the Assessing Officer became irrelevant, and the appeal of the assessee was allowed.

This detailed analysis provides a comprehensive overview of the issues involved in the legal judgment, focusing on the validity of the assessment under sec. 147 of the Income-tax Act, 1961. The Tribunal's decision highlights the importance of the Assessing Officer's independent application of mind in initiating proceedings, ensuring the validity of the assessment process.