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| The Tax Publishers2021 TaxPub(DT) 3247 (Kol-Trib) INCOME TAX ACT, 1961
Section 147
When AO got adverse information from Investigation Wing as a prudent and responsible officer, he should have made preliminary enquiry and collected materials which could have made him able to form the belief that there was escapement of income. However, AO neither furnished a copy of the same to assessee nor even recorded gist of the information from DIT in the reasons recorded by him to conclude that LTCG was bogus. In the facts and circumstances, legal requirement to reopen assessment, i.e., “reason to believe escapement of income” was not satisfied.
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Reassessment - Reopening based on investigation report - No preliminary enquiry made by AO -
AO received information from investigation wing as to assessee having claimed bogus long-term capital gains under section 10(38). Accordingly, AO reopened assessment and made addition under section 68. Assessee challenged this on the ground that AO while recording reason to believe simply reproduced the information emanated from Investigation Wing. Held: When AO got adverse information from investigation wing as a prudent and responsible officer, he should have made preliminary enquiry and collected materials which could have made him to able form the belief that there was escapement of income. However, AO neither furnished a copy of the same to assessee nor even recorded gist of the information from DIT in the reasons recorded by him to conclude that LTCG was bogus. In the facts and circumstances, legal requirement to reopen assessment, i.e., “reason to believe escapement of income” was not satisfied. Therefore, very action of issuing notice under section 148 was bad in law and consequently reassessment was quashed.
Relied:Pr. CIT v. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del) : 2017 TaxPub(DT) 1791 (Del-HC) and Key Components P Ltd. v. [ITO ITA No. 366/Del/2016 dated 12-2-2019 : 2019 TaxPub(DT) 1775 (Del-Trib)].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE ITAT, KOLKATA BENCH
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