TaxTMI 
TaxTMI 
2019 (11) TMI 345
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....g notice u/s 148 of the Income-tax Act, 1961 which is issued without proper sanction, is without any reason to believe, and is violation of section 147, 148, 149 & 151 of the Act and the entire proceedings of reassessment deserves to be quashed. 2. that on the facts and in the circumstances of the case, the ld. CIT (Appeals) grossly erred in restricting the trading addition to the extent of Rs. 3,23,575/- and in rejecting the books of account. 3. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing." Ground No. 1 is regarding validity of reopening of assessment. 2. The assessee is an Individual and proprietor of M/s. Rawat Jai Corporation carrying on business of tradin....
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....is statement of the AO as recorded in the reasons is factually incorrect as the assessee filed his original return of income on 29.10.2007. the return was filed on-line which was subsequently accepted by the AO that the assessee has filed the return of income. Therefore, the formation of belief by the AO on the basis of incorrect facts recorded in the reasons renders the reopening invalid and liable to be quashed. He has further submitted that even in the objections filed by the assessee against the notice issued under section 148 the assessee has specifically raised this objection about the wrong and incorrect information mentioned in the reasons which clearly shows that the AO has not applied his mind while forming the opinion/belief that....
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....rial on record. The AO has reopened the assessment by recording the reasons as under :- " As per information, the assessee has made bogus purchases of Rs. 24,02,235/- during the year under consideration as per information provided by DGIT (Inv.), vide his office letter dated 14.03.2014. Since assessee has not filed the return of income, purchases amounting to Rs. 24,02,235/- are not verifiable. In view of above given facts, I have reason to believe that Rs. 24,02,235/- has escaped assessment in term of section 47 of I.T. Act, 1961. It is a fit case for issuance of notice u/s 148 of I.T. Act, 1961. Dated : 27.03.2014. Sd/- (Umesh Jakhar) Income Tax Officer, Ward 2(1), Jaipur." Thus the reasons record....
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.... belief on such incorrect and vague reasons would lead the reopening of the assessment as invalid. The Hon'ble Gujarat High Court in case of Mumtaz Haji Mohmad Memon vs. ITO (supra) while considering an identical issue has observed in para 10 & 11 as under :- " 10. We are conscious that in the present case, the return filed by the assessee was not taken in scrutiny. Nevertheless, in such a case also the requirement that the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment, would apply. Reference in this respect can be made to the decision of this Court in case of Inductotherm (India) P. Ltd. vs. M. Gopalan, Deputy Commission of Income-Tax reported in (2013) 356 ITR 481 (Guj.). Valid....
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....) has also considered an identical issue and held that the AO proceeded for reopening of the assessment for non-existent and factually incorrect reasons and has not applied his mind. The Tribunal has concluded in para 19 as under :- " 19. In view of the above discussion, I hold that the AO had taken an irrelevant fact into consideration and reopened the assessments on the basis of suspicion. Further more, the Assessing Officer proceeded for re-opening of the assessment on non-existent and factually incorrect basis/reasons and has not applied his mind and did not verify the assessment records/returns filed by the assessee prior to recording of the reasons, therefore, re-opening of the assessments for assessment year 2001-02, 2002-03....