2015 (10) TMI 2424 - AT - Income Tax

Reopening of assessment - Held that - From the reasons recorded, nothing is borne out as to whether the Assessing Officer has applied his own mind with regard to the escapement of income chargeable to tax. We have carefully examined the orders of the ld. CIT(A) and we find that the ld. CIT(A) has adjudicated the impugned issue in the light of various judicial pronouncements in which it has been held that wherever the assessment is reopened on the sole basis of information received from the ADI or any other agency and without application of mind by the Assessing Officer, the reopening itself is invalid. We are, therefore, of the view that in the instant case, when the assessment was reopened without application of mind of the Assessing Officer and simply on the basis of information received from the ADI, the reopening is not valid. - Decided in favour of assessee.

Summary

Issues:
Validity of reopening of assessment under section 147/148/143(3) of the Income-tax Act, 1961 based on information received from ADI without application of Assessing Officer's mind.

Analysis:
The appeals were filed by the Revenue against the orders of the ld. CIT(A) annulling assessment orders passed by the Assessing Officer under section 147/148/143(3) of the Income-tax Act, 1961. The assessments were reopened based on information from the ADI regarding alleged introduction of own money as bogus gifts to purchase shares. The ld. CIT(A) deleted the additions made by the Assessing Officer, leading to the Revenue's appeal before the Tribunal. The Tribunal noted that the issue of the validity of reopening of assessment was not decided by the ld. CIT(A) and directed a re-adjudication. The ld. CIT(A) later annulled the assessment, stating that the Assessing Officer reopened it solely based on the ADI's report without applying his own mind. The Revenue contended that proper verification was done before reopening the assessment.

The ld. counsel for the assessee argued that the Assessing Officer did not apply his mind before reopening the assessment, making the reopening invalid. Upon examination, the Tribunal found that the Assessing Officer merely reproduced the information from the ADI without demonstrating independent consideration. The ld. CIT(A) based the decision on various judicial pronouncements, concluding that reopening assessments without the Assessing Officer's independent assessment is invalid. The ld. CIT(A) detailed the reasoning behind the annulment of the assessment, citing relevant case law to support the decision.

The Tribunal upheld the ld. CIT(A)'s decision, finding it in accordance with the law and without any identified flaws. Consequently, the assessment orders were annulled, rendering the cross objections raised by the assessees moot and dismissed. The appeals of the Revenue and the cross objections of the assessees were both dismissed. The Tribunal confirmed the decision of the ld. CIT(A) regarding the invalidity of the reopening of assessments based solely on information from the ADI without the Assessing Officer's independent assessment.