2015 (9) TMI 1552 - AT - Income Tax

Tribunal Invalidates Reassessment Based on Suspicion, Rules in Favor of Assessee

Dr. Papiya Dutta Versus Income Tax Officer, Ward-55 (1), Kolkata,

The Tribunal held the reassessment proceedings invalid as they were based on suspicion rather than a valid reason to believe, canceling the assessment ... Reopening of assessment - absence of reason to believe - Held that:- It is clearly evident from the reasons recorded by the Assessing Officer that there was actually no reason for him to have formed a belief about the escapement of any income of the assessee from the assessment, but the assessment was reopened by him to verify or examine certain particulars furnished by the assessee in the return of income, which according to the Assessing Officer, might have possibly involved introduction of her unaccounted money by the assessee. It is thus clear that the assessment was reopened by the Assessing Officer on the basis of suspicion and in order to make fishing and roaming enquiries, which, in my opinion, is not permissible. It is a settled position of law that the assessment can be reopened under section 147/148 on the basis of ‘reason to believe’ and not ‘reason to suspect’. - Decided in favour of assessee. Issues:Validity of assessment made under section 143(3) read with section 147 challenged by the assessee. Three additions made by the Assessing Officer and confirmed by the ld. CIT(Appeals) disputed by the assessee.Analysis:Validity of Assessment:The appeal challenged the validity of the assessment made by the Assessing Officer under section 143(3) read with section 147. The assessee contended that the assessment was reopened based on suspicion without any belief that income had escaped assessment. The reasons recorded by the Assessing Officer indicated a fishing expedition to verify certain particulars furnished by the assessee. The Tribunal noted that the assessment was reopened on suspicion, not on a reason to believe, which is impermissible under the law. Citing a previous Tribunal decision, it was established that reassessment proceedings initiated to find material about income escapement without a valid reason to believe are legally untenable. Consequently, the Tribunal held the reassessment proceedings invalid and canceled the assessment made by the Assessing Officer under section 143(3) read with section 147.Disputed Additions:As the Tribunal found the assessment invalid, the issues raised by the assessee disputing the additions made by the Assessing Officer became irrelevant. The Tribunal deemed it unnecessary to deliberate on the disputed additions due to the cancellation of the assessment. Consequently, the appeal of the assessee was treated as allowed, and the order was pronounced in favor of the assessee on September 18, 2015.