ITAT quashes Re-Assessment Proceedings as Information on the basis of which AO formed belief of escapement of Income was wrong [Read Order]

ITAT - Re-assessment Proceedings - AO - Taxscan

The Delhi Bench of  Income Tax Appellate Tribunal (ITAT) quashed the re-assessment Proceedings as information on the basis of which AO formed belief of escapement of income was wrong.

The Assessing Officer had formed the belief that the income of the assessee, Madan Mohan Tiwari had escaped assessment on the basis of information that the assessee had total receipt of about Rs.1.76 crores as per Form No.26AS and further that the assessee had not filed the return of income for the year under consideration. However, on the receipt of notice u/s 148 of the Act, the assessee filed objections against the reopening of the assessment stating therein that the information on the basis of which the Assessing Officer had formed belief of escapement of income was, in fact, wrong information.

In fact, the assessee had duly filed his return of income, and further, all the receipts could not be construed as the income of the assessee.

The coram of Accountant Member R.K. Panda and Judicial Member, Sanjay Garg ruled that when it has been brought to the knowledge of the Assessing Officer that the information on the basis of which he (Assessing Officer) had formed belief of escapement of income was in fact wrong information, then the very belief of the Assessing Officer of escapement of income of the assessee on the basis of such information also ceased to exist. The Assessing Officer, under the circumstances, should have applied his mind afresh to the fresh information brought to his knowledge.

“If after duly considering the records including the ITR of the assessee, the Assessing Officer would have been still of the view that there was reason to believe that the income of the assessee has escaped assessment, then, under those circumstances, the Assessing Officer was supposed to record fresh reasons to believe that the income of the assessee has escaped assessment, whereupon, the assessee should have been given an opportunity to file his objections and the Assessing Officer was accordingly supposed to proceed in accordance with the law,” the ITAT said.

The ITAT observed that it was brought to the knowledge of the Assessing Officer that the information on the basis of which he has formed belief of escapement of income of the assessee, was wrong, still, the Assessing Officer proceeded to frame the assessment on the basis of the aforesaid wrong information which was the basis for the formation of his belief. Under these circumstances, it cannot be said that the Assessing Officer has proceeded in accordance with the law. Framing of the assessment on the basis of the information, which was wrong information to the very knowledge of the Assessing Officer, in our view, cannot be held to be justified, nor can the same be said to be information to form the belief that the income of the assessee has escaped assessment. The reassessment framed on the basis of such wrong information and wrong belief is not sustainable in the eyes of law and the same was quashed.

Subscribe Taxscan AdFree to view the Judgment

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.

Related Stories