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The Assessing Officer (AO) reopened the assessment solely based on the information from a survey conducted by the Sales Tax Department, without independently examining the allegations or ascertaining the status of proceedings under the Sales Tax statute. The Income Tax Appellate Tribunal (ITAT) set aside the reopening, as the AO failed to apply their mind and did not inquire about the subsequent developments in the Sales Tax case, where the original assessment order had been set aside and the matter remitted for fresh assessment. The Commissioner of Income Tax (Appeals) erred in upholding the reopening based on a 'prima facie' formation of opinion. The High Court held that the reasons recorded by the AO cannot be considered proper to form a belief of income escaping assessment, as the information received was not found well-founded, and the AO made no efforts to verify or apply their mind to the same. The provisions of Section 147 do not give unfettered powers to reopen assessments, and the AO is required to satisfy the preconditions, which were lacking in this case.
The Assessing Officer (AO) reopened the assessment solely based on the information from a survey conducted by the Sales Tax Department, without independently examining the allegations or ascertaining the status of proceedings under the Sales Tax statute. The Income Tax Appellate Tribunal (ITAT) set aside the reopening, as the AO failed to apply their mind and did not inquire about the subsequent developments in the Sales Tax case, where the original assessment order had been set aside and the matter remitted for fresh assessment. The Commissioner of Income Tax (Appeals) erred in upholding the reopening based on a 'prima facie' formation of opinion. The High Court held that the reasons recorded by the AO cannot be considered proper to form a belief of income escaping assessment, as the information received was not found well-founded, and the AO made no efforts to verify or apply their mind to the same. The provisions of Section 147 do not give unfettered powers to reopen assessments, and the AO is required to satisfy the preconditions, which were lacking in this case.
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