The Tax Publishers2021 TaxPub(DT) 0076 (Chd-Trib)

INCOME TAX ACT, 1961

Section 147

Since AO wrongly recorded that assessee had not filed any return of income. This fact recorded by AO itself showed that he had not consulted the relevant record pertaining to the Income Tax return of the assessee and without consulting the relevant record, AO formed the belief on the basis of the information received from the Investigation Wing, therefore, reopening of the assessment without a reasonable belief formed by AO by applying his mind, cannot be held valid.

Reassessment - Reason to believe - Non-application of mind - Validity

AO got information from the Investigation Wing, based on the statement of one Mr. V, wherein, he had stated that he had used his bank accounts for providing accommodation entries. Since an amount was found deposited in the accounts of the assessee through the concern of Mr. V, hence, the said information was passed on by Investigation Wing to AO and he forming his belief on the said information reopened the assessment of the assessee. Assessee had made accommodation entry through Mr. V who have floated several paper concerns for layering and entry purposes. Thus, AO held that there was reasons to believe that the income had escaped assessment. Held: Information, though relevant, was needed to be examined and verified with the accounts as well as the IT return filed by the assessee. However, AO wrongly recorded that assessee had not filed any return of income. This fact recorded by AO itself showed that he had not consulted the relevant record pertaining to the Income Tax return of the assessee and without consulting the relevant record, AO formed the belief on the basis of information received from the Investigation Wing. AO had failed to properly apply his mind and belief formed by AO regarding escapement of income of assessee was based on mere suspicions only. Therefore, reopening of assessment without a reasonable belief formed by AO by applying his mind, cannot be held valid.

Relied:Andaman Timber Industries v. CCE (2015) 127 DTR 241 (SC) : 2015 TaxPub(DT) 5186 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12



IN THE ITAT, CHANDIGARH BENCH

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