2017 (4) TMI 706 - AT - Income Tax

Validity of the reassessment proceedings u/s 147 r.w.s 148 - non application of ind by AO - Held that - The proceedings u/s 148 of the Act were initiated only on the basis of the information received from the Investigation Wing of the department and the AO had not applied his own mind. Therefore, those proceedings were not valid. Accordingly, the reassessment framed by the AO is quashed. See PR. Commissioner of Income Tax-4 Versus G & G Pharma India Ltd. 2015 (10) TMI 754 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Validity of reassessment proceedings under section 147 r.w.s 148 of the Income Tax Act, 1961.

Detailed Analysis:

1. Facts and Background:
The appeal pertains to the validity of reassessment proceedings initiated under section 147 r.w.s 148 of the Income Tax Act, 1961. The assessee filed the return of income declaring an amount of ?445. The Assessing Officer (AO) initiated assessment proceedings based on information received regarding an alleged accommodation entry of ?5,00,000 from a specific entity.

2. Assessee's Challenge:
The assessee challenged the validity of the reassessment before the ld. CIT(A), contending that the AO did not have valid reasons to believe that income had escaped assessment. The assessee argued that the AO merely relied on information from the Investigation Wing without applying independent judgment.

3. Judgment Analysis:
The Tribunal analyzed the reasons recorded by the AO for reopening the assessment. It was observed that the AO's decision to reopen the assessment was solely based on information from the Investigation Wing, without any independent application of mind. Citing relevant case laws, the Tribunal emphasized the necessity for the AO to form a prima facie opinion based on material before issuing a reassessment notice.

4. Legal Precedents:
The Tribunal referred to the judgment of the Hon'ble Jurisdictional High Court in a similar case, emphasizing the requirement for the AO to apply his mind to the materials before reopening an assessment. The Tribunal concluded that the mere acceptance of information from the Investigation Wing without independent assessment rendered the reassessment proceedings invalid.

5. Decision and Conclusion:
Based on the analysis and legal precedents, the Tribunal allowed the appeal filed by the assessee, quashing the reassessment framed by the AO. The Tribunal held that the reassessment proceedings initiated solely on information from the Investigation Wing, without the AO's independent application of mind, were not valid under the law.

6. Final Verdict:
The Tribunal's decision highlighted the importance of the AO's independent assessment and application of mind before initiating reassessment proceedings. The judgment serves as a reminder of the legal requirements for reopening assessments under the Income Tax Act, ensuring fair and lawful procedures in tax matters.

(Order Pronounced in the Court on 23/02/2017)