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2021 (12) TMI 1505
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....Assessing Officer (assessing officer) u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 [hereinafter referred to as the "Act"], dated 19.12.2016. 2. Grievances raised by the assessee are as follows: "(1) On the facts and in the circumstances of the case and in law, the learned CIT (Appeals), Surat's order confirming the action of the assessing officer for initiating the proceedings u/s 147 and issuance of notice u/s 148 of the Act and hence, the order passed u/s 148 of the Act making addition of Rs. 69,53,846/- for the alleged bogus purchases of goods is being without jurisdiction, bad in law, perverse, arbitrary, conjectural and therefore liable to be annulled or quashed. (2) On the facts and in the circumstanc....
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....e during the course of the assessment proceedings. The assessing officer found that assessee had purchased polished diamonds for Rs. 69,53,946/- from M/s Mihir Diamonds and Gautam Jain by known entry operators, Gautam Jain Group who had been searched by the Investigation Wing Mumbai. Looking to the above facts, the assessing officer made addition of Rs. 69,53,846/- on account of bogus purchases. 4. Aggrieved, the issue was taken up before the first appellate authority for relief. Learned CIT (A) held that reopening of assessment under section 147/148 was valid. Besides, on merits, Ld CIT (A) has confirmed the action of the assessing officer. Aggrieved, the assessee has come up with the present appeal. 5. Shri Mitish S. Modi,....
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....he mandate of the provisions of section 147 of the Act, therefore reasons recorded by the assessing officer are valid. 7. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT (A) and other materials brought on record. We note that by way of this appeal, in ground no.1, the assessee has challenged correctness of the order passed by the assessing officer under section 143(3) r.w.s. 147 of the Income Tax Act 1961 dated 27.03.2015 and stated that reassessment proceedings are invalid. Therefore, it is necessary to examine the reasons recorded (vide asses....
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....he statute enacts that it shall be done in such a manner and in no other manner, such requirements are, in all cases absolute and neglect to attend to such requirement will invalidate the whole proceeding. Based on the above facts we are of the view that reasons recorded by the assessing officer are not in accordance with the scheme of the provisions of section 147 of the Act. 10. We note that section 147 of the Act authorizes and permits an Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that the said income for any assessment year has escaped assessment. The provisions of section 147 require that the Assessing Officer should have 'reason to believe' that any income chargeable to tax ....
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....retence. The powers of the Income-tax Officer to reopen assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed." 11. The purpose behind the relevant provisions imposing condition precedent for initiating reassessment proceedings is....
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.... reasons recorded are not as per the scheme of the provisions of section 147 of the Act. It is the condition precedent that before initiating the reassessment proceedings, the assessing officer has to carry out deep verification of the information and to apply his independent and judicious mind before issuing notice u/s 148 of the Act but, in the present case, without any effort to examine and to discuss the material received from the Investigation Wing, solely on such borrowed satisfaction, carried out the reassessment proceedings, which is bad in law. 12. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlie....