A Single Bench of the Income Tax Appellate Tribunal (ITAT), held that the Assessing Officer (AO) cannot reopen assessment in absence of tangible material showing escapement of income.
The assessee, Sikandar and Company is a firm derives income from trading on wholesale and semi-wholesale basis and Cattle feed items. The assessee filed return of income declaring a total income of Rupees Twenty-one thousand. The AO determined the total income of the assessee at Rupees eight lakhs under Section 143(3) of the Income Tax Act, 1961. Thereafter, the assessment was reopened under Section 148 of the Income Tax Act, 1961 by recording reasons.
The Counsel for the assessee submitted that the assessee disclosed all the material in the original assessment proceedings itself and reopening is only the change of opinion. The reassessment framed under Section 147 of the Income Tax Act, 1961 is invalid for the reason there was no indication on the failure of assessee disclosing all the relevant particulars fully and truly. In the present case also, the AO did not mention any tangible material came to its knowledge for reopening and also the failure of the assessee in disclosing fully and truly all the relevant particulars.
The Benchconsisting of SS Viswanethra Ravi, Judicial Member observed that “Admittedly, there is no date reflected on the order sheet on which day the AO has recorded the reasons for initiating proceedings under Section 147 of the Income Tax Act, 1961.In the present case, I find no such tangible material came to the knowledge of AO which resulted in a conclusion that there is an escapement of income from original assessment.”
“Therefore, the AO has no jurisdiction to reopen the assessment in the absence of any tangible material showing the escapement of income. Thus, the reassessment framed by the AO fails and as confirmed by the CIT(A) is not justified” the Tribunal said.
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