2016 (7) TMI 946 - AT - Income Tax

Reopening of assessment - Held that - There was no new material given are produced before the Assessing Officer to start reassessment proceedings is right while going through the reasons annexed to the paper book. There was no mention of a superior authority in the assessment order as well as in the order for rejecting the assessee s objections related to re-opening. Thus, the Assessing Officer prima facie has not acted upon as per the statute. The test of giving reasons to the assessee and the documents is missing. - Decided in favour of assessee.

Issues Involved:
1. Validity of reassessment proceedings under Sections 147 and 148 of the Income Tax Act.
2. Jurisdiction and authority of the Assessing Officer to initiate reassessment.
3. Availability and sufficiency of new/fresh information or material for reopening the assessment.
4. Compliance with the principles of natural justice and procedural requirements.
5. Validity of the approval process under Section 151 of the Income Tax Act.
6. Relevance and adequacy of the evidence used for reassessment.
7. Alleged change of opinion by the Assessing Officer.
8. Validity of the notice issued under Section 148.

Detailed Analysis:

1. Validity of Reassessment Proceedings:
The primary issue raised by the assessee was the validity of the reassessment proceedings under Sections 147 and 148 of the Income Tax Act. The assessee contended that the reassessment was "bad in law" and "void, illegal and invalid." The Tribunal observed that the reasons recorded by the Assessing Officer were general and lacked specific reference to the escapement of income. The Tribunal concluded that the reassessment proceedings were not legally valid as the reasons were recorded in a routine manner without proper application of mind.

2. Jurisdiction and Authority of the Assessing Officer:
The assessee argued that the Assessing Officer lacked jurisdiction, competence, and authority to initiate reassessment proceedings. The Tribunal noted that the Assessing Officer did not provide specific details regarding the approval from the superior authority, which is a mandatory requirement. The Tribunal found that the Assessing Officer acted without proper jurisdiction and authority.

3. Availability and Sufficiency of New/Fresh Information:
The assessee claimed that there was no new or fresh information justifying the reopening of the assessment. The Tribunal agreed, noting that the reasons recorded by the Assessing Officer did not mention any specific material or information indicating that the income had escaped assessment. The Tribunal emphasized that the reasons must be based on tangible material and not mere suspicion.

4. Compliance with Principles of Natural Justice:
The assessee argued that the principles of natural justice were not followed, as the Assessing Officer did not provide an opportunity for cross-examination of the persons whose statements were relied upon. The Tribunal observed that the Assessing Officer failed to make available the necessary documents and statements to the assessee, thereby violating the principles of natural justice.

5. Validity of the Approval Process:
The assessee contended that the notice under Section 148 was issued without the requisite approval under Section 151 of the Act. The Tribunal found that the Assessing Officer did not provide specific details regarding the approval, raising doubts about whether the proper approval process was followed. This lack of transparency further invalidated the reassessment proceedings.

6. Relevance and Adequacy of Evidence:
The Tribunal noted that the evidence used by the Assessing Officer, such as statements and affidavits, did not specifically reference the assessee company or its transactions. The Tribunal concluded that the evidence was inadequate and irrelevant for justifying the reassessment.

7. Alleged Change of Opinion:
The assessee argued that the reassessment was based on a mere change of opinion by the Assessing Officer. The Tribunal agreed, stating that the reasons recorded were based on existing information and did not constitute new material. A change of opinion does not justify reopening an assessment.

8. Validity of the Notice Issued:
The Tribunal found that the notice issued under Section 148 was invalid as it was based on vague and general information. The Tribunal emphasized that the notice must be based on specific and credible information indicating escapement of income.

Conclusion:
The Tribunal allowed the assessee's appeal, concluding that the reassessment proceedings were not legally valid due to the lack of specific and new information, improper jurisdiction and authority, non-compliance with the principles of natural justice, and invalid approval process. The revenue's appeal was dismissed. The order was pronounced in the Open Court on 12th May, 2016.

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