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2019 (3) TMI 324 - AT - Income TaxReopening of assessment - AYs Involved are 1996-97 & 1997-98 - Proceedings u/s 148 initiated on the basis of the findings given by Ld.CIT(A) in its appellate order for A.Y. 1998-99 - no prior approval of Joint Commissioner of Income Tax u/s 151 - non independent application of Mind by AO - HELD THAT - we find that the Ld. A.O has not applied his mind, nor gathered any material evidence and merely issued the notices u/s 148 of the Act on fallacious assumptions by acting only on the directions of Ld. CIT(A) who is legally not having such powers to give direction to reopen the assessment. It is also not disputed that the Ld. A.O has not taken the prior approval of Joint Commissioner of Income Tax u/s 151 of the Act before issuing notice u/s 148 of the Act which is a mandatory requirement. In our considered view the Assessing Officer has simply acted upon i.e. initiated the reopening proceedings on the directions of Ld. CIT(A) and has totally ignored his part of the job i.e. his satisfaction. - Decided in favour of assessee. Reopening of assessment - case was reopened on a ground but additions were made on different ground - HELD THAT - Assessee was opened for assessment after issuance of notice u/s 148 after 4 years from the end of the assessment year for the alleged escapement of income being the deposits in the bank and assessment framed thereafter on 27.12.2016. A.O did not made any addition or part thereof but has made addition for other income i.e. unaccounted investment. We therefore respectfully following the judgment JET AIRWAYS (I) LTD. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY and the given facts and circumstances of the case are of the considered view that as the Ld.A.O has not assessed the income for which the reasons were recorded in the notice issued u/s 148 of the Act, and therefore it was not open to him to make the addition for unaccounted investment - Decided in favour of assessee.
Issues Involved:
1. Validity of notice issued under Section 148 for escapement of income. 2. Validity of assessment made in the name of a deceased person. 3. Confirmation of additions made on account of unexplained cash credits. 4. Confirmation of additions on account of low household withdrawals. 5. Ignoring prior ITAT decisions relevant to the assessment years. 6. Reassessment proceedings initiated based on fallacious assumptions. Detailed Analysis: 1. Validity of Notice Issued Under Section 148 for Escapement of Income: The common legal issue raised by the assessee pertains to the validity of the notice issued under Section 148 for the alleged escapement of income within the meaning of Section 147, explanation 2(a) read with Section 150(1) of the Act. The facts reveal that the notices for Assessment Years 1996-97 and 1997-98 were issued beyond the four-year limitation period, making them barred by limitation. The Tribunal noted that the Assessing Officer (AO) issued these notices based on directions from the Commissioner of Income Tax (Appeals) [CIT(A)], which is legally impermissible as per various judicial precedents. The Tribunal cited several judgments, including Computer Science Corporation India (P) Ltd V/s Additional CIT and CIT V/s Green World Corporation, which emphasize that the AO must independently apply his mind and gather material evidence before issuing such notices. Consequently, the Tribunal held that the notices issued under Section 148 were void ab initio and quashed the reassessment proceedings for the relevant assessment years. 2. Validity of Assessment Made in the Name of a Deceased Person: For the assessment years 1996-97 and 1997-98, the assessments were made in the name of the deceased Dinesh Kumar Goyal, despite the AO being aware of his death on 26-02-2015. The Tribunal found this to be a significant procedural lapse, rendering the assessments invalid and bad in law. The Tribunal directed the AO to quash these assessments. 3. Confirmation of Additions Made on Account of Unexplained Cash Credits: The Tribunal observed that the CIT(A) confirmed various additions on account of unexplained cash credits in the names of different individuals. However, since the primary issue of the validity of the notices under Section 148 was decided in favor of the assessee, the Tribunal did not delve into the merits of these additions, rendering them academic and infructuous. 4. Confirmation of Additions on Account of Low Household Withdrawals: The Tribunal noted that the CIT(A) confirmed an addition of ?18,000 on account of low household withdrawals for the assessment year 1997-98. However, as the primary issue of the validity of the notices under Section 148 was decided in favor of the assessee, this ground was also rendered academic and infructuous. 5. Ignoring Prior ITAT Decisions Relevant to the Assessment Years: The assessee argued that the AO did not follow the ITAT's decision for the assessment year 1998-1999, which was equally relevant to the assessment years 1996-97 and 1997-98. The Tribunal found merit in this argument, noting that the CIT(A) and AO should have considered the ITAT's prior decisions. However, since the primary issue of the validity of the notices under Section 148 was decided in favor of the assessee, this ground was also rendered academic and infructuous. 6. Reassessment Proceedings Initiated Based on Fallacious Assumptions: For the assessment year 1999-2000, the Tribunal examined whether the AO could assess other income without assessing the income for which reasons were recorded. The Tribunal found that the AO made an addition for unexplained investment in a building without making any addition for the alleged bank deposits of ?1,85,553. Citing the judgment of the Bombay High Court in CIT V/s Jet Airways (I) Ltd, the Tribunal held that if the AO does not assess the income for which the notice was issued, it is not open to him to assess other income independently. Consequently, the Tribunal directed the AO to delete the addition of ?3,81,460 for unexplained investment in the building. Conclusion: The Tribunal quashed the reassessment proceedings for the assessment years 1996-97 and 1997-98, ruling the notices issued under Section 148 as void ab initio. For the assessment year 1999-2000, the Tribunal directed the AO to delete the addition for unexplained investment, as the primary reason for reopening the assessment was not addressed. All other grounds were rendered academic and infructuous. The appeals were partly allowed.
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