TaxTMI 
TaxTMI 
2016 (5) TMI 1399
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....e :- "On the facts and circumstance of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s.147 by issuing notice u/s. 148 of the I.T. Act, 1961." 3. It is a case of reopening the assessment on 29.03.2014. The Assessing Officer reopened the assessment by recording the following reasons:- "Reasons recorded for reopening the case u/s. 148 of the I.T. Act. In this case, information have been received from DCIT, Circle-6, Surat, that "During the course of Assessment proceedings in the case of Late Shri J.C. Shah for A.Y. 2011-12, it is noticed that residential property was shown as fixed assets in the balance sh....
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....rving rather cryptically that "the objection so raised by the assessee has been perused and found unreasonable". Aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) but again without any success. Ld. CIT(A) also dismissed the grievance of the assessee, against reopening of the assessment and observed as follows :- "6. The main contention of the appellant remained that said property was ancestral property which was given to Polar Property Management Pvt. Ltd. for use for the business without any consideration. The said property was never transferred to the said company and was later on taken back from the company. In view of these facts, the assessee has contended that since the property was not transferred, there wa....
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....quired to see whether there is prima facie material/information to arrive at a reasonable conclusion that there was escapement of income. Sufficiency of the reason is not open to question in a court of law but the existence of belief can be challenged. Courts can examine whether the reasons are relevant and have a bearing on the matters with regard to which he is required to entertain the belief before he can issue notice. Similar finding has been arrived at by various courts in the following cases:- * ITO Vs. Lakhmani Mewal Das (SC) 103 ITR 437 * Phool Chand Bajrang Lal & Anrs (SC) 203 ITR 456 * Raymond Woolen Mills Vs. ITO & Anr (SC) 236 ITR 34 6.2 The Hon'ble Supreme Court in the case of Kalyani Mavji & Co. Vs. CIT (SC 102 IT....
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....capital gain should have been offered for financial year 2006-07 relevant to assessment year 2007-08, which may not have been offered in the return of income". Essentially what the Assessing Officer, therefore, wanted was a verification of whether or not the amount has been offered in the return of income but then the scheme of the Act does not permit such reopening of the assessment to carry out such an exercise. It is important to bear in mind that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an enquiry which may result in detection of an income escaping assessment. Undoubtedly, at ....
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....r, it is useful to bear in mind observation made by Hon'ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das [(1976) 103 ITR 437]. "Reasons for the formation of belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts." 6. Viewed in this perspective and having noted that the reasons recorded for reopening of the assessment do not suggest anything more than the verifi....