The case pertains to the assumption of jurisdiction u/ss 147/148 ...

Improper reopening of assessment based on unverified info, procedural lapses. AO failed to follow due process.

Case Laws     Income Tax

October 3, 2024

The case pertains to the assumption of jurisdiction u/ss 147/148 read with section 151 of the Income Tax Act. The Assessing Officer (AO) wrongly assumed jurisdiction u/s 147 instead of the statutory path available u/s 153C. The case was reopened beyond the period of four years based on information received from the Investigation Wing, New Delhi, alleging bogus Long-Term Capital Gains (LTCG) and addition u/s 68 on account of share capital treated as an accommodation entry. The Tribunal held that the AO's reluctance to initiate reopening proceedings based on generalized and uncorroborated information, and the issuance of notice u/s 148 on the last day, implying compulsion to save on limitation, demonstrated a lack of independent inquiry and application of mind. The financial year was wrongly mentioned, approval was granted by the PCIT based on an incomplete Performa, and the satisfaction of the Additional CIT that the 'case requires verification' did not meet the requirement of 'chargeable income has escaped assessment' u/s 148. The Tribunal found overwhelming reasons that the reasons recorded and approval granted u/s 151 did not meet legal requirements. The issuance of notice u/s 148 based on cryptic reasons and mechanical approval by the Pr.CIT u/s 151 did not pass.

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