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2024 (4) TMI 266 - AT - Income TaxValidity of Reopening of assessment u/s 147 - Cash deposited in bank account - assessee has not furnished the Income Tax Return for assessment year 2010- 11 - whether the deposits made in the bank account were reflecting in the return of income or not? - HELD THAT - Facts on record clearly reveal that the assessee, indeed, has furnished his return of income under section 139(1) of the Act for the assessment year under dispute. Thus, it is established on record that while recording the reasons for reopening of assessment, the AO has not thoroughly examined the materials available in his own record. Also further observed that the return of income for the impugned assessment year was filed by the assessee before the very same AO. Had he examined the assessment record properly certainly, he could have verified the return of income filed by the assessee and ascertained whether the deposits made in the bank account were reflecting in the return of income or not. Thus, it is evident, the Assessing Officer has reopened the assessment on wrongful assumption of facts. This, in our view, vitiates the initiation of proceedings under section 147 of the Act, which ultimately culminated in passing of the assessment order under section 147/144 of the Act. Thus proceedings initiated for reopening of assessment under section 147 of the Act are invalid. Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order passed u/s 147/144 of the Income-tax Act, 1961. 2. Reopening of assessment based on incorrect facts. Summary: Issue 1: Validity of the assessment order passed u/s 147/144 of the Income-tax Act, 1961 The assessee challenged the validity of the assessment order passed u/s 147/144 of the Income-tax Act, 1961. The Assessing Officer (AO) reopened the assessment based on AIR information indicating cash deposits of Rs. 46,34,231/- in the assessee's savings bank account. The AO proceeded ex-parte and added Rs. 95,24,077/- to the income, representing both cash and cheque deposits. The first appellate authority upheld the validity of the proceedings u/s 147 but granted partial relief by deleting the addition of cheque deposits. Issue 2: Reopening of assessment based on incorrect factsThe assessee contended that the reopening of the assessment was based on a wrong assumption of facts, as the AO incorrectly noted that no return of income was filed for the year in question, despite the return being filed u/s 139(1). The Tribunal observed that the AO did not thoroughly examine the materials on record, leading to an incorrect assumption of facts. This vitiated the initiation of proceedings u/s 147, rendering the assessment order invalid. The Tribunal relied on the decision in Shri Anuj Chaudhary Vs. ITO, ITA No. 3453/Del/2018, where it was held that reopening based on incorrect facts invalidates the proceedings. Similar views were upheld by various High Courts, emphasizing that reopening based on erroneous facts and non-application of mind by the AO is unsustainable. Consequently, the Tribunal quashed the reassessment, holding that the assumption of jurisdiction u/s 147 was based on incorrect facts. The appeal was allowed, and the assessment order was declared invalid. The grounds on merits were deemed academic and not adjudicated. Order pronounced in the open court on 4th April, 2024.
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