TaxTMI 
TaxTMI 
2016 (11) TMI 1125
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....eferred to as the AO) and the other by the Revenue against the order of the Ld. CIT(A) dated 06.09.13 agitating the deletion of the penalty levied by the AO under section 271(1)(c) of the Act. First we take up the assessee's appeal i.e. ITA No.2418/M/2010. ITA No.2418/M/2010 (Assessee's Appeal) 2. The assessee, in this appeal, has taken there effective grounds of appeal. In the first ground, the assessee has challenged the reopening of the assessment by the AO under section 147/148 of the Act. In the second ground, the assessee has challenged the action of the AO in treating the compensation received on account of relinquishment of tenancy rights as deemed dividend under section 2(22)(e) of the Act as against 'Capital gains' offered by t....
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....f section 147, the AO need merely a reason to believe that income has escaped assessment provided the four year time limit has not expired. If the AO has formed a prima facie opinion that assessee did not possess tenancy rights at that stage that belief, even only on assumption, was sufficient to reopen the assessment and it would be subsequently open to the assessee to prove or disprove the correctness or otherwise of the assumption. He, therefore, held that at the stage of issue of notice under section 148, the correctness or sufficiency of the material was not very relevant. He, therefore, upheld the validity of the reopening of the assessment. Being aggrieved by the above finding of the Ld. CIT(A), the assessee has come in appeal before....
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....ion to letter dated 26.09.06 vide which the assessee had explained the nature of tenancy rights and the amount of compensation received towards relinquishment of tenancy rights. The Ld. Counsel for the assessee has further invited our attention to page 31 to 36 of the paper book which is the record relating to the wealth tax assessment order for the assessment year 1990-91. He has invited our attention to page 34 i.e. annexure 'A-2' which is the computation/valuation of immovable property as on 31.03.90 wherein the immovable property of Gharda Chemicals Ltd. has been valued at Rs. 59,625/-. On the right side the name of tenants who have occupied the said property has also been mentioned wherein the name of assessee Dr. Keki H. Gharda is dul....
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.... decision of the Hon'ble Supreme Court in the case of "Kelvinator India Ltd." (2010) 228 CTR(SC) 488 and of the Hon'ble Bombay High Court in the case of "Direct Information (P) Ltd. vs. ITO" (2011) 15 taxman.com 63 (Bombay). On the other hand, the Ld. D.R. has strongly relied upon the findings of the lower authorities and has stressed that the reopening of the assessment even from the knowledge gathered from the records by the AO was valid in this case. 7. We have heard the rival contentions and have also gone through the records. Undisputedly, no new fact or information had come to the knowledge of the AO to form belief that the income in this case had escaped assessment. As noted above, the AO had formed the belief stating that on exami....
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....rom the records it is observed that the assessee was not tenant, in our view, is nothing but the change of opinion on the part of the AO. As per the provisions of section 147 of the Act, the AO is authorized to reopen the assessment proceedings, if he has reason to believe that any income chargeable to tax has escaped assessment. The courts of law time and again have held that such a reason to believe that the income of the assessee has escaped assessment should be based on some tangible material which comes to the knowledge of the AO. An assessment cannot be reopened under section 147 of the Act on the basis of mere suspicion. A perusal of the reasons recorded reveals that assessment has been reopened on the assumption that assessee was no....
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....nnot be investigated by the court. The entire law as to what would constitute "reason to believe" has been summed up by Supreme Court in Income Tax Officer v Lakhmani Mewaldas (1976) 103 ITR 437. 8. In this case, the original assessment u/s 143(3) of the act had already become final. The AO therefore was precluded from review of the assessment which had already become final. The addition by the AO in respect of compensation received on relinquishment of tenancy rights was nothing but the review of the already finalized assessment that too without any material evidence available to the AO to form such a belief in this respect. The Hon'ble Supreme Court in the case of "CIT vs. Kelvinator of India Ltd." has held that we must keep in mind the ....