Asstt. CIT v. Mohd. Ayub Mohd. Yaqub Perfumers (P) Ltd.

INCOME TAX ACT, 1961

--Reassessment --Reason to believe No valid reason for reopening --During the course of search conducted upon Shri Sohanraj Mehta, entry of Rs. 50 lakhs was found in the name of Malik Kannauj, MD of the assessee-company. On the basis of seized documents, the AO issued notice under section 148 to assessee on the belief that the income chargeable to tax had escaped assessment, as this amount was not shown by the assessee in its books of account. On Appeal, CIT(A) annulled the assessment under section 147. Held: CIT(A) held that the AO had no material before him which could link the said payment to the assessee company. The 'reasons to believe' in the case had been recorded on irrelevant material. On the basis of such material, no prudent man could have formed the belief that income had escaped assessment in the hands of the assessee company. Therefore, the very assumption of jurisdiction by the AO under section 147 of the Act was illegal and, therefore, could not be sustained. Since no infirmity was found in the order of CIT(A), same was confirmed.

Income Tax Act, 1961, Section 148

Followed:CIT v. Daulat Ram Rawat Mull (1973) 87 ITR 349 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2003-04

IN THE ITAT, LUCKNOW B BENCH

SUBSCRIBE FOR FULL CONTENT