INCOME TAX ACT, 1961

Section 147

Reassessment - Eligibility of reasons to believe - Disallowance of loss - No prima facie opinion formed by AO

Assessee had filed her return of income electronically. According to AO, he had received information that the assessee has entered into transactions in different segments through M/s. A where she indulged in Client Code Modifications and, therefore, her share/demat transactions and any other such financial transactions/activities are needed to be examined and verified. He reopened the assessment by recording reasons and issued notice under section 148. AO thereafter passed an assessment order and made an addition. This addition was made by disallowing the loss claimed by the assessee. Held: In the judgment of Gujarat High Court in the case of Pr. CIT 5 v. Manzil Dineshkumar Shah (2018) 406 ITR 326 (Guj) : 2018 TaxPub(DT) 2717 (Guj-HC), it was propounded that for verification or for re-examination, reopening was not justified. There should be first prima facie opinion that income had escaped assessment. Only thereafter verification would come. In the present case, there was no prima facie opinion formed by AO before issue of notice under section 148. Therefore, reopening of assessment was bad in the eyes of law.

Followed:Pr. CIT 5 v. Manzil Dineshkumar Shah (2018) 406 ITR 326 (Guj) : 2018 TaxPub(DT) 2717 (Guj-HC), Peass Industrial Engineers Pvt. Ltd. v. Dy. CIT (2016) 73 taxmann.com 185 (Guj) : 2016 TaxPub(DT) 5020 (Guj-HC) and Bakulbhai Ramanlal Patel v. ITO (2011) 56 DTR 212 (Guj.) : 2011 TaxPub(DT) 2014 (Guj-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2009-10

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