TaxTMI 
TaxTMI 
2022 (1) TMI 644
X X X X Extracts X X X X
X X X X Extracts X X X X
....riod of 4 years is illegal and bad-in-law requiring outright annulment. 2. Without prejudice to the aforesaid ground No. 1 regarding legality of the reopening of the concluded assessment, even otherwise on the facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in sustaining an addition of Rs. 20,00,000/- u/s. 68 of the Act as made by the ITO, by treating the unsecured loan received by the assessee during the year under consideration as unexplained cash credit, which is absolutely erroneous and incorrect requiring outright annulment. 3. The assessee craves to add, amend, alter, substitute, modify any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing." 3. Briefly stated, the relevant material facts are as follows. The assessee filed return of income for the assessment year under consideration, declaring total income of Rs. 1,41,370/-, on 30.09.2009. The said return of income was processed u/s. 143(1) of the Income Tax Act. Subsequently, the assessment was completed u/s. 143(3) r.w.s. 153A of the Income Tax Act, 1961, on 24.12.2010, determining total income at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act, after the expiry of the statutory period of 4 years is illegal and bad-in-law. During the assessment proceedings, assessee had furnished books of accounts, evidences and documents as required by the assessing officer. There was no failure on the part of the assessee to disclose fully and truly all material facts during the original assessment proceedings, hence reassessment proceedings initiated against the assessee is not in accordance with the provisions of the Act, therefore, reassessment proceedings should be quashed. 7. Mrs. Anupama Singla, Sr. DR for the Revenue, pleads that there is no infirmity in the reasons recorded by the assessing officer. The assessing officer got the information from the Investigation Wing and then after applied his mind and issued the notice u/s. 147/148 of the Act. There is a clear escapement of income. Therefore, reasons recorded by the Assessing Officer are valid and hence the reassessment proceeding initiated by the Assessing officer is valid in the eye of law. Hence, she prayed before the Bench that order passed by the assessing officer may be sustained. 8. We have heard both the parties and carefully gone through the submission pu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have therefore, reason to believe that such income chargeable to tax and also any other income chargeable to tax exceeding Rs. 1 lakh for A.Y. 2007-08 has escaped assessment within the meaning of provision of section 147 and hence I propose to reopen the assessment u/s. 147 of the I.T. Act, 1961, for A.Y. 2007-08." 9. Learned Counsel submits that scrutiny assessment, in assessee's case has been concluded for the assessment year 2007-08, vide assessment order u/s. 143(3) r.w.s. 153A of the Act dated 24-12-2010, wherein the returned income has been accepted. During the original assessment proceedings, the assessee had submitted before the assessing officer, the books of accounts, bills, invoices, purchase details, sales details, bank statements and other evidences/documents, as called by the assessing officer, hence there is no failure on the part of the assessee to disclose fully and truly all material facts. 10. We note that the main issue to reopen the concluded assessment was unsecured loan received from AZ Jewels. We note that loan received from AZ Jewels has been verified and accepted in the original assessment proceeding u/s. 143(3) by raising specific query in this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elhi High Court was considering a case of reopening u/s. 147 within 4 years from the end of the assessment year. The Court held that when a regular order of assessment is passed in terms of section 143(3) of the Act, a presumption can be raised that such an order has been passed on application of mind. It was held that if it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong. It was held that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion. On appeal by the department to the Supreme Court, (reported in 320 ITR 561(SC)) it was held that though the power to reopen under the amended section 147 is much wider, one needs to give a schematic interpretation to the words "reason to believe" failing which section 147 would give arbitrary powers to the AO to re-open assessments on the basis of "mere change of opinion", whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r section 147/148, as the same would amount to reviewing the earlier decision. There has to be some relevant tangible material for the AO to come to the conclusion that there is escapement of income from assessment, and there must be a live link with such material for the formation of the belief. The reasons should also disclose due application of mind as reopening of the assessment proceeding is not an empty formality. On a perusal of the recorded reasons, we are not able to discern as to how the AO has come to a conclusion that there is a failure on the part of the Assessee in fully and truly disclosing all material facts for the purpose of the assessment. Though, the recorded reasons allude to an ostensible failure on the part of the Assessee to disclose fully and truly all material facts, however, the recorded reasons except for using the expression "failure on the part of the Assessee to disclose fully and truly all material facts", do not specify as to what is the nature of default or failure on the part of the Assessee. The reasons also do not explain or specify as to what is the rationale connection between the reasons to believe and the material on record. The Supreme Cour....