Re-Assessment proceedings solely based on objection of Audit Para are Invalid: ITAT Jaipur [Read Order]

In a recent ruling, the Jaipur bench of the Income Tax appellate Tribunal held that the re-assessment under section 147 of the Income Tax Act are invalid if the same is based solely on the objection of audit para. The Tribunal was considering a second appeal filed by the assessee, an individual against the order of the CIT(A), who sustained the proceedings on the first appeal.

The bench noted that the AO is not supposed to make all that as part of the assessment order. He is supposed to make the enquiries to be part of assessment order where he is not satisfied and where he holds different views.

Reliance was placed on the decision in the case of Arvind Bhartiya Vidhyalaya Samti vs. ITO, in which the ITAT concluded the decision in favour of the assessee in a similar circumstance.

Quashing the re-assessment order, the bench observed, “The copies of documents submitted in the form of Paper Book further reveals that the case was reopened solely on the basis of the major audit para. This indicates that there was no application of mind by the AO as provided in section 147 of the Act . The ld. AR of the assessee relied on various case laws which were taken into consideration. Further in the case of ACIT, Circle, Barmer Vs. Shri Nakhat Singh Bhati [49 Tax World 111 (Jodhpur)] order dated 14.02.2013 for the A.Y.2008-09, it was held that since the reopening of the assessment u/s 147 of the Act was solely based on the objection of audit para, therefore the reassessment proceedings are not valid. The assessment framed u/s 147 is null & void.”

Read the full text of the order below.