2012 (10) TMI 326

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....ly justified in holding that there has been no failure on the part of the assessee to disclose fully and truly all material facts in respect of income of minor children for the purpose of assessment for the year under consideration. (2) Whether on the facts and in the circumstances of the case the Tribunal is legally justified in holding that since the reasons recorded for reopening of the assessment do not stand legal scrutiny and the initiation of proceedings u/s 147 (1)/148 of the I.T. Act was bad in law addition made in pursuance thereto were legally sustainable." 2. The assessee is a partner in M/s Chandra Timber Traders of Chandra Timber Group. The search and seizure operations were conducted on 19.1.1989 at the business and res....

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....r, deleted the additions of Rs. 50,000/- on account of unexplained cash credits. 5. The Tribunal held that the power to reopen computed assessment and to reassess the income under Section 147 of the Act is on the satisfaction of the AO that the income chargeable to tax had escaped assessment. The power is to be exercised to satisfy the statutory conditions for initiation of proceedings. The AO must have reason to believe that the income had escaped assessment and secondly he must have reason to believe that such escapement had occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for assessment for that year. Section 148 casts obligation on the AO to issue not....

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.... AO. The additional grounds taken in appeal also did not have any substance inasmuch as the remedy against the order passed by the AO in giving effect to the CIT (A)'s order for assessment year 1989-90 was available before CIT (A). 8. Shri Govind Krishna, learned counsel appearing for the revenue submits that the Tribunal failed to appreciate that proceedings under Section 147 (a)/148 were validly initiated. The assessee had failed to disclose all material and relevant facts in respect of his income in assessment year 1988-89. 9. We have perused the orders passed by the AO and CIT (A) and the reasoning given by the Tribunal in setting aside these orders. The Tribunal did not commit any error of law in explaining the powers of the A....