The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) held that if the income, the escapement of which was the basis of the formation of the reason to believe, is not assessed or reassessed, it would not be open to the AO to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the Section as having escaped assessment.
The assessee in this case is Digamber Jain Atikshaya Keshtra has filed the return of income for the Assessment Year (AY) 2010-11, which fact is clearly established from the assessment order. The relevant evidence like computation of total income and acknowledgement of return by Income Tax Department is placed on record in assessee’s paper book.
The Assessing Officer (AO) reopened the assessment under Section 147 of Income Tax Act, 1961 but did not provided any copy of reasons recorded, for reopening of the case of the assessee trust .
Aggrieved by the order the assessee filed an appeal before the Commissoner of Income Tax (Appeals) [CIT(A)], which confirmed the action of AO. Further aggrieved the assessee filed an appeal before the Tribunal.
The Authorised Representative of the assessee (AR) of the assessee stated that the reassessment proceedings are illegal, without jurisdiction and therefore deserve to be quashed
The Departmental Representative (DR) supported the order of the lower authorities
The Bench comprising of DR. S. Seethalakshmi, Judicial Member and Rathod Kamlesh Jayantbhai, Accountant Member observed that the crux of the issue in this appeal is that whether the reopening of the assessment by the AO is valid alongwith not providing copy of the reasons recorded by him to the assessee.
The Bench noticed from the assessment order that the assessee trust was not provided copy of reasons during the assessment proceedings which indicates from its written submission that the assessee trust was deprived off filing the objections against the reasons recorded.
Further it was noted that AO had computed the income on the basis of return of income filed by the assessee trust which as per the reasons recorded was said to be have not been filed by the assessee trust.
Thus the jurisdiction under Section 147 of the Income Tax Act was wrongly assumed and thus entire assessment proceedings is without jurisdiction and thus it is quashed in view of the decisions of Narain Dutt Sharma vs ITO and Satish Kumar Khandelwal vs ITO.
It was noticed that the notice issued under Section 148 of the Income Tax Act containing the reasons for reopening the assessment does not contain a reference to a particular issue with reference to which income has escaped assessment.
Hence, the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment.
It was held that if the income, the escapement of which was the basis of the formation of the reason to believe, is not assessed or reassessed, it would not be open to the AO to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment.
Therefore, the Tribunal found that reopening of assessment was patently illegal and deserves to be quashed and thus appeal of the assessee was partly allowed.
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