The Bombay High Court quashed the reassessment notice on the ground of failure to satisfy conditions under Section 147 of the Income Tax Act, 1961 and non-application of mind.
The Petitioner, Punia Capital Pvt Ltd, challenged the validity of the notice issued under Section 148 of the Income Tax Act, 1961, as also the proceedings for reopening of assessment under Section 147 of the Act.
The Petitioner filed a return of income under Section 139 of the Act for the assessment year 2015-16. The case was selected for scrutiny under Computer Assisted Scrutiny Selection (‘CASS’). The assessing officer issued a notice under Section 142(1) of the Act calling for various details mentioned therein.
A notice under Section 148 of the Act was issued by the assessing officer seeking to reopen the Petitioner’s assessment for the assessment year 2015-16 on the ground that the assessing officer had reason to believe that income for that year had escaped assessment within the meaning of Section 147 of the Act.
Objections were filed by the assessee in which, it was stated that the reasons for initiating re-assessment proceedings were based upon an incorrect factual matrix inasmuch it was not a case where the loan had been taken by the Petitioner, but a case, where the loan had been advanced to M/s Outstripe Suppliers Pvt Ltd. on which, the Petitioner was also receiving interest.
The Bench comprising of Justice Dhiraj Singh Thakur and Abhay Ahuja observed that “In our opinion, the manner in which the assessing officer proceeded reflects total non-application of mind, which neither satisfies the jurisdictional condition, which was required to be followed in terms of Section 147 nor does it in the least satisfy the conditions prescribed in the case of Hindustan Lever Ltd.”
“No scrutiny assessment had been made and that the only requirement was to initiate proceedings under Section 147 on the basis of ‘reason to believe’ goes to prove that the assessing officer had reopened the assessment only on the basis of ‘reason to believe’ and not a failure to disclose material facts fully and truly, on which too the assessing officer ought to have been satisfied as matter pertained to reopening beyond the period of four years”, the Court said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
