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TMI Blog2019 (3) TMI 1932X X X X Extracts X X X X X X X X Extracts X X X X ..... has stated that in the notice issued U/s 142(1) of the I.T. Act the AO has mentioned the cash deposit in the bank account however, the AO finally made the addition on account of payment of credit card bills then the notices issued U/s 142(1) itself was not considered by the AO while making the addition. Even otherwise the notice issued U/s 142(1) would not substitute the reasons recorded by the AO. Accordingly,the amount which was proposed to assess the income by the AO in the reasons recorded is not actually represents the payment of credit card bills then, reopening based on the incorrect facts and non application of mind is not sustainable in law. - Decided in favour of assessee. - ITA No. 872/JP/2018 - - - Dated:- 8-3-2019 - SHRI VIJAY PAL RAO, JM SHRI VIKRAM SINGH YADAV, AM For the Assessee : Shri Manish Tatiwala (C.A.) For the Revenue : Shri A. K. Mehla (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 19.03.2018 of ld. CIT (A), Udaipur for the assessment year 2008-09. The assessee has raised the following grounds:- 1. That the learned Commissioner of Income Tax (Appeals-2), Udaipur has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s permissible. Therefore, no amendment, alteration or change can be made to the reasons recorded for reopening of the assessment U/s 148 of the Act. Even it is not open to the AO to improve upon the reasons recorded at the time of issuing the notice either by adding or substituting the reasons. There is no tangible material having nexus with the reasons recorded by the AO to form the belief that income assessable to tax on account of payment of credit card bills has escaped assessee. The ld. AR has submitted that the reasons must provide a live link to the formation of the belief that income has escaped assessment. In support of his contention, he has relied upon the decision of Hon ble Bombay High Court in case of Infotech Ltd. V/s ACIT 329 ITR 257. The AO in the reasons recorded has stated that the assessee has made payment of credit card bills but subsequently in the remand report he has submitted that it is a clerical mistake in the reasons recorded instead of recording cash deposit in the saving bank account of the assessee. Thus the ld. AR has submitted that the reopening of the assessment and consequently reassessment order is not sustainable and liable to be quashed. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand report has accepted the fact that there was no payment by the assessee towards credit card bills but this amount represents the cash deposited in the bank account. Therefore, the reasons recorded and the income assessed by the AO on account of payment of credit card bills are not based on correct facts which the AO has stated in the remand report that this amount of ₹ 14,90,050/- represents cash deposit in the bank account and further interest of ₹ 39,000/-. If the reasons recorded by the AO are considered in light of the correct facts of the case then it is clear that at the time of reopening of the assessment the AO has not applied his mind and even while passing the reassessment order the AO has again made the addition on account of credit card bills and not as cash deposited in the bank account. Subsequent rectification of mistake in the remand report will not substitute the reasons recorded by the AO for reopening of the assessment. The Hon ble Bombay High Court in case of Hindustan Lever Ltd. vs. R.B. Wadkar (supra) has held in para 19 to 23 as under:- 19. In the case in hand, it is not in dispute that the assessment year involved is 1996-97. The last dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice itself is beyond the period of four years from the end of the asst. yr. 1996-97 and does not comply with the requirements of proviso to s. 147 of the Act, the AO had no jurisdiction to reopen the assessment proceedings which were concluded on the basis of assessment under s. 143(3) of the Act. On this short count alone the impugned notice is liable to be quashed and set aside. 22. Since we are setting aside the impugned notice only on the first ground of challenge, in our opinion, it is not necessary to go to the other question and record our findings in that behalf. 23. In the result, the impugned notice is quashed and set aside. Rule is made absolute in terms of prayer cl. (a) with no order as to costs. Therefore, for the purpose of considering the validity of reopening and reasons recorded by the AO to establish a live link between the reasons and evidence only reasons recorded are to be looked into and not the subsequent explanation of the AO regarding the mistake in the reasons. In the case in hand, the AO himself as admitted the mistake in the reasons recorded and we find that it is not only mistake in the reasons recorded but the AO has also made the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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