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Invalid Reopening of Assessment, Additions Deemed Invalid, Assessee Appeal Allowed The Tribunal found the re-opening of assessment to be legally invalid as no additions were made by the Assessing Officer regarding the transactions ...
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Invalid Reopening of Assessment, Additions Deemed Invalid, Assessee Appeal Allowed
The Tribunal found the re-opening of assessment to be legally invalid as no additions were made by the Assessing Officer regarding the transactions prompting reassessment. Relying on precedent, all additions in the reassessment were deemed invalid and ordered to be deleted. The Tribunal quashed the assessment order, setting aside the CIT(A)'s decision, and allowed the appeal by the assessee. The order was pronounced on 1.5.2018.
Issues Involved: Validity of re-opening of assessment and validity of various additions made in the reopened assessment.
Analysis: 1. The appeal challenged the order dated 31.8.2016 by the CIT(A)-46, Mumbai, relating to A.Y. 2007-08. The assessee contested the re-opening of assessment and the additions made.
2. The Assessing Officer reopened the assessment based on information received regarding transactions with Standard Chartered Bank, investments in RBI Bonds, and purchase of immovable property. The assessee argued that the reopening was unjustified as it was solely based on suspicion without concrete evidence, citing relevant case laws.
3. The assessee refuted the allegations, stating no bank account with Standard Chartered Bank, no property purchase on the specified date, and RBI bond purchases through bank accounts. The AR relied on the principle that if no income escapement is found after reopening, no additional assessment can be made, following the decision in CIT Vs. Jet Airways.
4. The CIT(A) found an error in the report by the Sub-Registrar, leading to a mistaken recording of reasons by the Assessing Officer. The AR emphasized that reasons once recorded cannot be altered, citing Hindustan Lever Ltd. Vs. R B Vadkar.
5. The Tribunal noted that no additions were made by the Assessing Officer regarding the transactions prompting the reassessment, indicating satisfaction with the explanations provided. Following the decision in Jet Airways case, all additions in the reassessment were deemed invalid and ordered to be deleted.
6. The Tribunal concluded that the re-opening of assessment lacked legal validity and ordered the quashing of the assessment order, setting aside the CIT(A)'s decision. The appeal by the assessee was allowed, and the order was pronounced on 1.5.2018.
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