TaxTMI 
TaxTMI 
2026 (2) TMI 1176
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....e has reopened the assessment. The reasons recorded by him are on page No. 7 and 8 of the Paper Book. The proforma sent for approval to the Addl. Commissioner of Income Tax has been placed on page No.9 and 10 of the Paper Book. We take note of the reasons which read as under : 1 The assessee has not filed his return of income for the A. Y. 2011-12. 2. As per AIR information available with this office, during the FY 2010-11 relevant to AY 2011-12, the assessee has made investment to the tune of Rs.4,40,00,000/-. in purchase of immovable property. 3. On analyzing information available, it is seen that the assessee has made investment to the tune of Rs.4,40,00,000/-. in purchase of immovable property during the FY 2010-11 relevant to AY 2011-12.. 4. In order to verify the above information, after obtaining approval u/s 1.33(6) of the Income Tax Act,1961 from the Pr. Commissioner of Income Tax, letter seeking information about the return of income and source of investment in immovable property was issued to the assessee on 23-06-2016,14.12.2017 and 1203-2018. In response to this asssessee attended the proceedings on 16-03-2018 and furnished the copy ....
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.... the above reasons, assessment was reopened. The AO, thereafter, passed the assessment order u/s 143(3) on 29.12.2018. This assessment is read with Section 147 which has not been noted by the AO. The ld. AO has determined the taxable income of the assessee at Rs.5,65,56,040/-. 5. Dissatisfied with the assessment order, assessee carried the matter in appeal before the CIT(A). The ld. CIT(A) has quashed the re-opening by recording following finding : "9. From the copy of the reasons as reproduced above, it has been mentioned by the Assessing Officer that the assessee has not filed his return of income for Asstt. Year 2011-12 in paragraph-1 and then in paragraph 6, it has again been reiterated that since the assessee did not file any return a income for Asstt. Year 2011-12 and, therefore, there is reason to believe that the income amounting to Rs. 4.40 crores has escaped assessment am further, the very basis of initiation of proceedings u/s 148 are that since then is failure on the part of assessee to file the return u/s 139 of the Income Tax, the provisions of section 147 of the Act, are clearly applicable and then then in para 7 & 8, it has been mentioned that since no r....
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....t has been held that there has to be nexus of the reason to believe and material available with the AO and which in present case is none as per reasons. Reliance is being further placed on the following judgments:- Sagar Enterprises vs. ACIT (2002) 257 ITR 335 (Gujarat High Court) "Notice u/s 148 issued on the ground of factually incorrect basis that the assessee had not filed its return could not be sustained even on the basis of alternative reason since it could not be said with certainty as to which factor weighed with the concerned officer when he issued the impugned notice and when the respondent authority was himself unsure as to the year of taxability of the income which is stated to be undisclosed income." Harjeet Singh Vs ITO (ITAT Delhi), order dated 12.11.2018, in ITA No. 2013/DEU2015 "In my considered opinion, the basis of reopening itself is based on wrong facts therefore, the same cannot be upheld. I accordingly set aside the notice u/s 148 of the Act the reassessment based on such notice deserves to be quashed. Since the assessment itself, has been quashed the other ad-hoc disallowance stand deleted. 5. In the res....
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.... of both the 'ears are not in accordance with the law and accordingly quash the assessment orders passed for both the years under consideration. Shri Ram Mohan Rawat V/s Income Tax Officer in ITA No.1014/JP/2018 JAIPUR-TRIB Accordingly, in view of the above facts and circumstances of the case, when the AO has initiated the proceedings on the basis of non-existent and factually incorrect facts and reasons without application of mind and without verification of the facts available on record, then the proceedings initiated under section 147/148 are not sustainable in law. The same are set aside and consequential reassessment order is quashed. 6. Since the reopening is set aside and quashed, therefore, the ground no. 2 raised on the merits of the addition becomes infructuous. INTHIS CASE THE JUDGMENT OF CHANDIGARH BENCH OF BABA KARTAR SINGH DUKKI EDUCATIONAL TRUST V/S ITO 158 ITD 0965 HAS BEEN CONSIDERED AND FOLLOWED. Shri Allen De Noronha V/s ACIT, in ITA No.338/LKW/2015 - LUCKNOW-TRIB The objections of the assessee stating that certain wrong facts are recorded that is also not categorically rebutted by the Department. We are, ....
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....forwarded the information. The basic requirement of law for reopening an assessment is application of mind by the AO to the material or information in his possession to conclude and arrive at a satisfaction therefrom that income has escaped assessment. Both application of mind and sat is faction /belief of the AO are lacking in the pre sent case. The reassessment therefore we hold is invalid. The case laws relmd upon by the Ld. Counsel for the assessee support the case of the assessee, The order passed by the AO is, therefore, set aside." Reliance is also being placed on the judgment of Chandigarh Bench of the ITAT in the case of Smt. Sarika Jain & Others vs. ITO (2016) 46 ITR (Chd Trib.) 246 This judgment of the Chandigarh Bench has been followed in the cases of Sh. PremSagar Jain in ITA No. 71/Chd/2015, in the case of Sh. Kamal Kant Jain in ITA No. 70/CHD/2015 and in the case of Sh. Narinder Kumar Jain in ITA No. 72/CHD/2015 for AY 2006-07. Further to that the case of the case of the assessee is directly covered by the recent judgment of The Hon'ble Jurisdictional Bench of ITAT Chandigarh in the case of Smt. Monika Rani in ITA no. 582/chd/2....
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....ourt decisions, the view taken by the Rajasthan High Court is correct and the view taken by the Gujarat High Court is not correct. Accordingly, we dissent from the view taken by the Gujarat High Court and in view of the decisions of the Supreme Court and Rajasthan High Court, we hold that the ITO did not* have the jurisdiction to proceed with the reassessment, the moment he found the two grounds mentioned in the reassessment notice incorrect or non-existent. Accordingly, we answer the referred question in favour of the assessee, in the affirmative, that the Tribunal was right in cancelling the reassessment. " 13. After going through the above said facts of the case and the settled legal position and the said judgments of Jurisdictional Bench of the ITAT, Chandigarh Bench, Chandigarh and others and particularly the fact that the Assessing Officer was not justified in assuming the proceedings u/s 148 on the basis of wrong/incorrect facts and, thus, he had wrongly assumed the jurisdiction and hence the assessment as made by the AO is liable to be quashed. 14. The another point raised by the Ld. Counsel of the assessee is that the Assessing Officer has blindly relied ....
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....ance of notice u/s 148 and, thus, the issuance of notice and assumption of jurisdiction by the Assessing Officer u/s 148 is void ab-initio and consequently, the assessment as framed by the AO is quashed on both the grounds. As regards the other grounds of appeals are concerned regarding the admission of additional evidence and also addition on account of unsecured loan and disallowance of cash expenditure u/s 40(3), since I have already allowed the necessary relief on the legal issue regarding the assumption of jurisdiction u/s 148 and thus, I am not inclined to discuss other grounds. 17. Conclusion : In the result, the appeal is Allowed for statistical purpose" 6. The ld. CIT DR while impugning the order of ld. CIT(A) contended that there was no scrutiny assessment passed in the present case. If the return was filed by the assessee, then that must have been processed only under Section 143(1) of the Act but these issues have never been examined in a scrutiny assessment. She relied upon order of the AO. 7. The ld. counsel for the assessee, on the other hand, submitted that no doubt, scrutiny assessment was not framed but formation of belief by the AO that in....
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....4-101 10. Copy of order in the case of Shri Satnam Singh vs DCIT in ITA No. 144/Chd/2016 order dated 26.09.2016 102-109 11. Copy of order in the case of KMV Collegiate Sr. Sec. School v. ITO (2017) 163 ITD 653 (Asr.) (Trib.) 110-121 12. Copy of order in the case of Baba Kartar Singh Dukki Educational Trust v. ITO (2016) 158 ITD 965 (Chd.)(Trib.) 122-134 13. Copy of order in the case of Smt Monika Rani vs ITO (W-2),Kurukhetra in ITA No. 582/CHD/2019 135-145 MECHANICAL APPROVAL BY CIT U/SEC. 151 OF THE ACT: 14. Copy of order in the case of Rosha Alloys P Ltd. vs DCIT as reported in 175 taxmann.com 622 (Chandigarh - Tnb.) 146-183 15. Copy of order in the case of Mohd. Shafiq Cement Store vs ITO as reported in 168 taxmann.com 72 (Amritsar - Trib.) 184-192 8. We have duly considered the rival contentions and gone through the record carefully. A bare perusal of Section 147, as was applicable in the case of the assessee for assessment year 2011-12 (prior to Finance Act 2021) would reveal that this Section contemplates that "if the AO has reasons to believe that any income chargeable to tax has escaped assessment for any assessmen....
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....wo stages, (i) When the assessment order was passed after scrutiny under Section 143(3) of the Act and (ii) When an order under Section 154 of the Act was passed. (emphasis supplied)" 8.1 Similarly, we take note of the observations of Hon'ble Bombay High Court from the judgement of Ankita A. Choksey Vs ITO : "6. It is a settled position in law that the Assessing Officer acquires jurisdiction to issue a reopening notice only when he has reason to believe that income chargeable to tax has escaped assessment. This basic condition precedent is applicable whether the return of income was processed under Section 143(1) of the Act by intimation or assessed by scrutiny under Section 143(3) of the Act. Further, the reasons to believe that income chargeable to tax has escaped assessment must be on correct facts. If the facts, as recorded in the reasons are not correct and the assessee points out the same in its objections, then the order on objection must deal with it and prima-facie, establish that the facts stated by it in its reasons as recorded are correct. In the absence of the order of objections dealing with the assertion of the assessee that the correct facts are not ....