Tribunal quashes assessment due to invalid notice, emphasizing lack of genuine belief & impermissible addition of income.

The tribunal allowed the appeal on jurisdictional grounds under section 147 of the Income Tax Act, ruling the notice under section 148 invalid. The tribunal emphasized that the assessing officer lacked a genuine belief of income escapement and was conducting a fishing inquiry, contrary to legal requirements. The addition of unaccounted income was deemed impermissible without an independent belief of income escapement. Consequently, the assessment under section 147 was declared null and void, leading to the quashing of the appeal solely on jurisdictional grounds.

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Issues: Jurisdiction under section 147 of the Income Tax Act and addition of unaccounted income.

Jurisdiction under section 147:
The appeal was filed challenging the jurisdiction under section 147 of the Income Tax Act and the addition of unaccounted income. The counsel for the assessee argued that the reasons recorded for assuming jurisdiction were flawed as they were dated after the notice was issued. However, the Revenue contended that the reasons were pre-existing and the date mentioned was for reproduction purposes. The tribunal found no merit in the argument and noted that the jurisdictional requirements were met. The counsel further argued that the AO lacked a genuine belief of income escapement and was merely conducting a fishing inquiry. Citing judicial precedents, the counsel contended that such actions were impermissible in law. The tribunal agreed, emphasizing that the AO's actions did not meet the legal mandate, and the notice under section 148 was deemed invalid.

Addition of unaccounted income:
The reasons recorded indicated that the AO intended to verify transactions based on information received from another departmental wing. The tribunal observed that the AO did not have a definite belief of income escapement but sought to investigate the accuracy of the information. It was noted that the AO's actions did not fulfill the requirements of section 147, as an independent belief of income escapement was necessary. Citing legal precedents, the tribunal emphasized that reopening assessments solely for investigation without a prima facie belief of income escapement was impermissible. Consequently, the tribunal deemed the assessment under section 147 as null and void, leading to the quashing of the appeal based on jurisdictional grounds.

In conclusion, the tribunal allowed the appeal on the grounds of jurisdiction under section 147 of the Income Tax Act, without delving into the merits of the case. The decision was pronounced in open court on 04/01/2021.

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