Reopening of assessment by AO set aside jurisdiction npt validly assumed, ITAT
Reopening of assessment by AO set aside jurisdiction npt validly assumed, ITAT
Assesssee reopened assessment. It issued notice. Assessee challenged reopening of assessment. assessee made addition on account of gift from undisclosed sources u/s 69A (of Income Tax Act, 1961). On appeal ITAT held, AO did not have any reason to believe that income chargeable to tax has escaped income. AO did not validly assumed jurisdiction u/s 147 (of Income Tax Act, 1961)/148 of I.T. Act for re-opening of assessment in matter. Thus, AO order of reopening assessment was set aside.-501386
Facts in Brief:
1. Assessing Officer passed the order under section 143(3) (of Income Tax Act, 1961) read with Section 148 (of Income Tax Act, 1961).
2. Original assessment for assessment year 2005-06 had been reopened by issuing of notice under section 148 (of Income Tax Act, 1961) and after recording reasons, which are reproduced in the assessment order.
3. Assessing Officer issued notice.
4. Assessee challenged the re-opening of the assessment under section 148 (of Income Tax Act, 1961) and also stated that the proceedings are bad in law but the Assessing Officer stated that the gift was received for love and affection by the donee, is not tenable since it was received from the stranger and there was no such occasion and accordingly made addition on account of gift from undisclosed sources under section 69A (of Income Tax Act, 1961).
5. On appeal CIT(A) held, that for the purpose of re-opening, the only requirement is that there should be reliable information and the belief of the Assessing Officer that income has escaped assessment and after considering the material on record, ld. CIT(Appeals) justified the action of the Assessing Officer in re-opening of the assessment and this ground of appeal of the assessee was dismissed.
6. The ld. CIT(Appeals), with regard to addition of merit also considered the material on record and noted that the donors have made series of gifts therefore, same could not be said to be voluntary and accordingly, confirmed the addition on merit as well by following the decision of Hon'ble Punjab & Haryana High Court in the case of Lal Chand Kalra Vs CIT 22 CTR 135 and upheld the action of the Assessing Officer and accordingly, dismissed the appeal of the assessee.
On appeal ITAT held,
7. Considering the facts of the case in the light of the above discussion, it is clear that information was received by the Assessing Officer from the DCIT, CC-V, Ludhiana dated 05.03.2007 which did not reveal any fact of escapement of any income. It refers only decision of Hon'ble Punjab & Haryana High Court in the case of Lal Chand Kalra (supra). This did not say that assessee received any bogus gift.
8. The reasons did not satisfy requirements of Section 147 (of Income Tax Act, 1961). There is no reference to any document or statement except reference to the judgement of High Court. The same could not be regarded as a material or evidence that prima-facie showed or established nexus or link which disclosed escapement of income in the case of the assessee. There is nothing in the reasons recorded to show any tangible material had come into possession of Assessing Officer subsequent to issue of intimation.
9. A valid re-opening of assessment has to be based only on tangible material to justify the conclusion that there is escapement of income. The Assessing Officer recorded wrong facts in the reasons as mentioned above and thus, has not applied his mind before forming belief of escapement of income. The information dated 05.03.2007 was not a pointer and did not indicate escapement of income.
10. The Assessing Officer did not examine the information which was nothing and did not speak of escapement of income before recording his own satisfaction of escaped income initiating re-assessment proceedings. Thus, Assessing Officer acted only on the basis of suspicion and same could not be said that it was based on belief that income charged to tax has escaped assessment. The Assessing Officer did not have any reason to believe that income chargeable to tax has escaped income.
11. The Assessing Officer, therefore, did not validly assumed jurisdiction under section 147 (of Income Tax Act, 1961)/148 of the Income Tax Act for re-opening of the assessment in the matter. We, accordingly, set aside the orders of authorities below and quash the re-opening of the assessment under section 147 (of Income Tax Act, 1961)/148 of the Income Tax Act. Resultantly, all additions would stand deleted. In view of the above findings, there is no need to decide the issue of gift on merit because the same is left with academic discussion only.
12. In the result, appeal of the assessee is allowed.
13. The ld. Representatives of both the parties submitted that issues are same in these appeals as have been considered in appeal No. 316/2012 in the case of Smt. Sarika Jain. By following the reasons for decision in the case of Smt. Sarika Jain (supra) we set aside the orders of authorities below addition quash the re-opening of the assessment under section 147 (of Income Tax Act, 1961)/148 of the Income Tax Act.
14. Resultantly, all additions on merit would stand deleted. There is no need to decide the issues on merit as the same is left with academic discussion only. Both the appeals of the assessee are allowed.
15. In the result, all appeals of assessees are allowed.
News Reference:Sarika Jain, Ludhiana vs Assessee
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