In a recent decision the Bombay High Court ruled that is the onus of the Assessing Officer (AO) to provide reasons to disbelieve bank statements and supporting documents for reopening assessment.
The writ petition under Article 226 of the Constitution of India challenging the notice under section 148 of the Income-tax Act, 1961 issued by the Deputy Commissioner of Income Taxfor reopening of assessment for assessment year (‘A.Y.’) 2008-09 and the order, rejecting the objections raised by Petitioner to the notice issued to re-assess the income.
The petitioner,M/s. Aditi Constructions, a partnership firm filed its return of income for AY 2008-09 on 15th September 2008 and the case was selected for scrutiny and a notice under Section 143(2) of the Income Tax Act was issued. Thereafter, by a notice under Section 142(1) of the Income Tax Act a questionnaire seeking details regarding loans and advances of secured and unsecured loans was issued.
The Deputy Commissioner of Income Tax concluded that the Petitioner has failed to ‘fully and truly’ disclose material facts in the original assessment and contended that the department had to only make out a ‘prima facie case’ on the basis of which the Department could reopen the case and the ‘sufficiency and correctness’ of the material was not a thing to be considered at this stage.
The Court of Justices Kamal Khata and Dhiraj Singh Thakur noted that “The Petitioner has by production of bank statements and supporting documents shown that the reasonable belief of the Assessing Officer was unfounded and consequently the presumption that the Petitioner was one of the beneficiaries of the accommodation entries based on the statement of the third party was disproved.”
“The onus would be on the Assessing Officer to provide reasons to disbelieve the bank statements and supporting documents for reopening the assessment. That in our view has not been spelled out and therefore, the reassessment sought to be initiated deserves to be stalled” the Bench opined.
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