2017 (9) TMI 1229 - AT - Income Tax

Reopening of assessment - reasons to believe - non providing reason within reasonable time - Held that - In the present case the assessee has filed the return of income on 18/04/2013 in response to the notice under section 148 of the income tax act dated 22/03/2013. On the date of filing of the return of income, the assessee requested for the reasons recorded. However, the correct reasons recorded were provided to the assessee only on 20/03/2014 i.e. Just before 10 days of the completion of the assessment. The Hon ble Supreme Court in case of GKN driveshaft India Ltd versus ITO. 2002 (11) TMI 7 - SUPREME Court has provided guidelines that reasons must be provided within reasonable time. We are of the opinion that Ld. assessing officer has not provided the reasons to the assessee within reasonable time but only at the fag end of the assessment proceedings. Furthermore, the Hon ble Supreme Court has further guided that only after disposing of the objections of the assessee with respect to the reopening of the assessment, the assessing officer shall proceed for reassessment. In the present case, the assessment proceedings were already completed before providing the correct reasons to the assessee. In view of this, we do not have any hesitation in holding that reassessment proceedings are invalid. - Decided in favour of assessee.

2019 (11) TMI 808 - AT

Issues Involved:
1. Validity of the assessment order under Section 148/143(3) of the Income Tax Act, 1961.
2. Validity of the reopening of the assessment under Section 148.
3. Failure to disclose material facts necessary for assessment as per the first proviso to Section 147.
4. Reopening of the assessment based on information from the Investigation Wing.
5. Issuance of revised "reasons to believe" letters and their legal implications.
6. Disposal of objections by the Assessing Officer without application of mind.
7. Existence of "reasons to believe" within the meaning of Section 147/148.
8. Sustaining the addition under Section 69A of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of the assessment order under Section 148/143(3):
The appeal was filed against the assessment order dated 28.03.2014 for the Assessment Year 2007-08. The assessee argued that the assessment order was erroneous both on facts and in law.

2. Validity of the reopening of the assessment under Section 148:
The assessee contended that the reopening of the assessment was based on information from the Investigation Wing, which constituted an opinion and not material necessary for reopening. The Tribunal noted that the Assessing Officer (AO) had issued a notice under Section 148 based on the information received, but the reasons recorded were not clear and unambiguous, and there were discrepancies in the amounts mentioned.

3. Failure to disclose material facts necessary for assessment as per the first proviso to Section 147:
The AO did not provide any direct link or specific information about the material or evidence of total payment of ?78,58,980/-. The Tribunal observed that the AO recorded reasons without application of mind and failed to verify the details of payment made by the assessee.

4. Reopening of the assessment based on information from the Investigation Wing:
The information received from the Investigation Wing was not substantiated with concrete evidence. The Tribunal highlighted that the AO should have applied his mind to the information and independently arrived at a belief that income had escaped assessment.

5. Issuance of revised "reasons to believe" letters and their legal implications:
The AO issued a revised "reasons to believe" letter on 20.03.2014, citing typographical errors in the original letter dated 22.04.2013. The Tribunal held that reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The AO's action of issuing revised reasons was not tenable in law, as reasons cannot be altered, changed, or supplemented.

6. Disposal of objections by the Assessing Officer without application of mind:
The objections raised by the assessee on 24.03.2014 were disposed of on the same day without proper consideration. The Tribunal noted that the AO had already made up his mind to make the impugned addition, which was unjustified.

7. Existence of "reasons to believe" within the meaning of Section 147/148:
The Tribunal observed that the AO did not have valid reasons to believe that income had escaped assessment. The reasons recorded were based on presumptions and were not supported by tangible and credible material.

8. Sustaining the addition under Section 69A of the Income Tax Act, 1961:
The AO made an addition of ?67,21,980/- under Section 69A as deemed income. The Tribunal found that the assessee had provided sufficient explanations and documentary evidence to substantiate the total investment made. The addition was made without confronting the material relied upon by the AO to the assessee.

Conclusion:
The Tribunal quashed the reassessment proceedings, holding that the AO did not provide the reasons for reopening the assessment within a reasonable time and failed to dispose of the objections properly. The reassessment proceedings were declared invalid, and the appeal of the assessee was allowed.

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