2023 (8) TMI 1113 - AT - Income Tax

Reopening of assessment - validity of reasons to believe - HELD THAT -reasons state the incorrect assessment year on the top of the reasons recorded as A.Y. 2009-10 whereas in the bottom the same is stated as AY 2010-11. Besides we note that the AO has only referred to letter of the Investigation wing stating that the assessee has deposited cash in a number of dubious accounts however no such accounts were brought on record in the reasons recorded . In our opinion, there is no application of mind by the AO and this is the case of borrowed satisfaction as the AO has not applied his mind to the information received from Investigation Wing. Under this circumstance, we are not in a position to sustain the re-opening of assessment and therefore the same is bad in law.

Summary

Issues involved:
The issues involved in this case are the condonation of delay in filing the appeal and the validity of the assessment proceedings under section 147 of the Income Tax Act, 1961.

Condonation of Delay:
The appellant filed an appeal delayed by three days, attributing the delay to the logistical challenges of being based in Assam while the jurisdiction was with Kolkata Benches. The Appellate Tribunal, considering the circumstances, condoned the delay and admitted the appeal for adjudication.

Validity of Assessment Proceedings:
The appellant contended that the assessment under section 147 of the Act was invalid as the notice issued under section 148 was not served upon them. The appellant argued that the Assessing Officer (AO) had initiated the assessment based on borrowed satisfaction, without applying his own mind to the information received. The AO incorrectly mentioned the assessment year in the reasons recorded, indicating a lack of clarity and non-application of mind. The Tribunal found that there was no application of mind by the AO, leading to a case of borrowed satisfaction. Consequently, the Tribunal quashed the reopening of assessment, as it was deemed bad in law.

Penalty Imposition:
The appellant also challenged the imposition of a penalty under section 271(1)(c) of Rs. 3,09,000, which had been confirmed by the First Appellate Authority. However, since the Tribunal quashed the reopening of assessment, the penalty imposed was considered consequential and directed to be deleted.

In conclusion, the Tribunal allowed both appeals of the assessee, finding in favor of the appellant on the issues of delay condonation and the validity of the assessment proceedings.