The Delhi bench, Income Tax Appellate Tribunal (ITAT) while quashing the reassessment proceedings held that the Assessing officer failure to provide proper reason with respect to escapement of income regarding investment in house construction.
The Assessee Surender Dalal,case was reopened based on an information received from DDIT wherein it has been stated that assessee has invested more than 15 crores in construction of house in Rohta. Hence the AO make addition to Rs.29 lakhs as against Rs.02,28,08,450/- on account of unexplained investment in construction of house property
Aggrieved by the order assesee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal filed by the assessee . Thereafter the assessee filed an appeal before the tribunal.
During the adjudication Rano Jain. Athavale, the counsel for assessee argued that there are factual inconsistencies in the reasons recorded u/s 148 in as much as it is stated in the reasons that no return has been filed which is contrary to record as the assessee in fact filed return of income.
Further in the reasons recorded it is stated that information was received from DDIT(Inv.) that the assessee invested more than 15 crores in construction of house property. Thus The reasons do not specify in which property the assessee has invested more than 15 crores in the reasons specified. Accordingly notice u/s 148 cannot be issued on the basis of mere suspicion or to make further investment.
Anuj Garg, Department representatives argued that the Assessing Officer has reopened the assessment based on the information received from DDIT, wherein it is stated that the assessee has invested more than 15 crores in construction of house in Rohtak.
The tribunal observed that In the reasons recorded the AO has not given any details as to how the income more than 15 crores has escaped assessment. Nothing in the reasons specified as to how the escapement of income has been arrived at more than 15 crores. There is no live link between the reasons recorded and the materials on record when the reasons were recorded.
Apparently, there is no enquiry made by the AO to find out whether the assessee has filed return of income or not and whether the report of the DDIT(Inv.) which is stated to be the basis for reopening of assessment that the income had escaped more than 15 crores
After analyzing the submission of both parties, the bench comprising G.S. Pannu, (Vice President) & Challa Nagendra Prasad, (Judicial Member)quashed the reassessment proceedings and held that the Assessing officer failed to provide proper reason with respect to escapement of income regarding investment in construction house .
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