2023 (7) TMI 508 - HC - Income Tax

Reopening of assessment u/s 147 - reassessment proceeding was triggered based on a Tax Evasion Petition (TEP) - HELD THAT - It is not in dispute that the reassessment proceeding was triggered on account of the TEP. There is no other material available on record, based on which the AO formed an opinion, that there was reason to believe that income chargeable to tax had escaped assessment. This is evident upon a bare perusal of the reasons furnished by the AO for reopening the assessment for the AY in issue, i.e., 2011-12. It is well established that income in each AY is to be assessed independent of the circumstances which obtain in other AYs. The only exception is that where issues are common, the courts have at times adopted the principle of consistency. In this case, that principle surely would not apply. Bald assertions in the TEP that the petitioner had claimed bogus expenses towards salary and other heads, in our view, was not sufficient for commencement of the reassessment proceeding under Section 147 read with Section 148 of the Act. Decided in favour of assessee.

Summary

Issues involved:
The judgment concerns a writ petition against a notice issued under Section 148 of the Income Tax Act, 1961 and the order passed by the Assessing Officer for Assessment Year (AY) 2011-2012.

Reassessment Proceeding Triggered:
The reassessment proceeding for AY 2011-12 was challenged by the petitioner as being flawed, primarily based on a Tax Evasion Petition (TEP) and the disallowance of expenses claimed in AY 2014-15. The petitioner argued that the reassessment was not supported by tangible material.

Material for Reassessment:
The AO had triggered the reassessment based on the TEP and the disallowance of expenses in AY 2014-15. However, the Court found that these grounds were insufficient to justify the reassessment for AY 2011-12. The Court emphasized the need for independent assessment for each AY and the lack of substantial material to support the reassessment.

Judicial Analysis:
The Court scrutinized the reasons furnished by the AO for reopening the assessment and found that the only basis for forming the opinion of income escaping assessment was the TEP and the past disallowance of expenses. The Court highlighted that the AO lacked additional documents or evidence to initiate the reassessment.

Decision and Conclusion:
Ultimately, the Court set aside the notice and order, concluding that the reassessment proceeding against the petitioner for AY 2011-12 was not justified. The Court emphasized the importance of substantial material and independent assessment for each AY, ruling in favor of the petitioner and disposing of the petition accordingly.