The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench while quashing the reassessment proceedings held that the reopening is not permissible merely to seek investigation of facts.
The assessee, Sujay Pankajbhai Shah challenged the action of the AO in usurping jurisdiction under section 147 of the Act wrongfully.
The assessee contended that the reasons recorded by the AO do not meet the prerequisites for assumption of jurisdiction and therefore the notice issued under section 148 of the Act pursuant to the reasons spelt out is bad in law.
It was thus essentially submitted that the consequent re-assessment order is without authority of law.
The assessee highlighted the reasons recorded under section 148(2) of the Act and firstly contended that notice under section 148 of the Act was issued on the assessee dated March 19, 2013, thereafter referred to the reasons recorded which is shown to be dated March 26, 2013. It was thus contended that the reasons were recorded subsequent to the issuance of notice and therefore the whole action of the AO is vitiated in law.
The Revenue pointed out that the reasons were actually recorded on March 19, 2013 itself which is evident from the proposal sent by the AO to the Jt.CIT for his approval under section 151 of the Act on March 19, 2013. The reasons recorded showing date of March 26, 2013 is merely a date on which the reasons recorded might have been reproduced and provided to the assessee and does not convey the date of recording of reasons per se.
The Coram consisting of Madhumita Roy and Pradeep Kumar Kedia noted that powers exercised under section 147 of the Act was to enable the AO to carry out detailed verification of the various aspects of such matter in reference made to the AO herein by the office of Director of Income Tax, Delhi.
“Ostensibly, the AO, at best, has made out a case of probable escapement in contrast to a definite prima facie conclusion of escapement of income. Mere quoting of Section or iteration of expression ‘reason to believe’ would not satisfy the requirement of law. Thus, the requirement of section 147 of the Act is clearly not fulfilled in the instant case,” the ITAT said.
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