TaxTMI 
TaxTMI 
2023 (10) TMI 844
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....e deleted. 10. That based on the facts and circumstances of the case and in law, the approval granted u/s 151 of the Income Tax Act, 1961 was not in accordance with law as it was accorded in a mechanical manner, hence reassessment proceedings initiated u/s 147 is bad in law and liable to be quashed. 11. On the facts and in the circumstances of the case and in law, the Ld.AO and Ld.CIT(A) erred in rejecting the explanation and evidences brought on record by the assessee to prove the identity, creditworthiness and genuineness of the transaction disallowed u/s 68 of the Act. 12. Ld.AO & CIT(A) is erred in law to reassess issue other than the issue in respect of which proceedings u/s 147 are initiated, which is bad in law and liable to be deleted. 13. Ld.AO is erred in law by not specifying section under which the addition has been made, which is bad in law and liable to be deleted." 2. The Ld. Counsel for the assessee submits that the additional grounds raised are purely legal grounds which are going to the very jurisdiction of reopening of the assessment by the Assessing Officer and, therefore, they may be admitted and adjudicated. Reliance was placed on the ruling of the Ap....
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....s from issue of notice u/s 148. The copy of notice u/s 133(6) PB2 Pg no.5 and reply of ICICI Bank PB 2 Pg no.7 is enclosed for reference in the paper book. 7. Ld. Counsel is relying on the decision of the Hon'ble Supreme Court in Sheo Nath Singh Vs. AAC [1971] 82 ITR 147 (SC) has held that the words 'reason to believe' suggest that the belief must be that or an honest and reasonable person based upon reasonable grounds and that the ITO may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumor. In the present case the report based on a statement has no evidentiary value. The Ld. AO has not based his 'reason to believe' on any direct or circumstantial evidence. Hence the same is bad in law. 8. The Ld. Counsel for the assessee further submits that the AO re-opened the case based on Annual Information Report (AIR) received from AIR ITD Portal, which is bad in law. The AO has not conducted any enquiry with respect to source of such cash deposited and merely raised a suspicion about income escaped from assessment of Assessee. The Assessee has furnished ITR and declared gross turnover of Rs. 16,62,200/-. The Assessee has also withdrawn cash from said bank a....
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....partment; hence the same is deemed to be his income from undisclosed sources. Keeping in view the facts stated above, I have, therefore, reasons to believe that income to the extent of Rs. 17,30,110/- chargeable to tax for the AY 2010-11 has escaped assessment in view of Section 147 of the Income Tax Act, 1961." 11. These reasons are recorded on 03.03.2017 before issue of notice u/s 148 of the Act. As could be seen from the reasons for reopening the assessment it is the AIR Information generated from the ITD application that the Assessing Officer came to know that there were cash deposits of Rs. 17,30,110/- in ICICI Bank Limited belonging to the Assessee. The Assessing Officer in the reasons stated that the assessee was asked to explain the source and as the assessee failed to explain and, therefore, he believed that the assessee has invested the amounts from the sources not disclosed to the Department and the same is deemed to be the income from undisclosed sources. As could be observed from the reasons the Assessing Officer at the time of recording of reasons of reopening he was not in possession of any tangible materials with him suggesting that the income had escaped assessm....
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....een committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYs in question does not satisfy the requirement of law." 6.7 The Hon'ble High Court in the referred cases clearly held that it is established principle of law that if a particular authority has been designated to record his/her satisfaction on a particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be "independent" and not "borrowed" or 'dictated' satisfaction. 6.8 From the judgments referred above, inference can also be drawn that demonstration of link between the tangible material and the formation of the reasons to believe that income had escaped assessment is necessary for reopening the case u/s 147/148 of the Act and the information received from the Investigation Wing or AIR cannot be said to be a tangible material per se without further inquiry being undertaken by the AO. The conclusion of the AO, based on the Investigation Report or AIR information inde....
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....been undertaken by the Assessing Officer, who had deprived himself of that opportunity by proceeding on the erroneous premise that the assessee had not filed a return for the AY 2004- 05, when in fact it had. In his assessment order, the Assessing Officer had, instead of adding a sum of Rs. 78 lakhs, even going by the reasons for reopening of the assessment, added a sum of Rs. 1.13 crores and the basis for such addition had not been explained. No error was committed by the Appellate Tribunal in holding that reopening of the assessment u/s 147 was bad in law. 12. Recently, in its decision dated 26th May, 2017 in ITA No.692/2016 (Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd.), this Court discussed the legal position regarding reopening of assessments where the return filed at the initial stage was processed under Section 143(1) of the Act and not under Section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Wing regarding accommodation entries provided by a 'known' accommodation entry provider. There, on....