Where ITR is processed u/s 143(1) AO can form reasons to believe that income has escaped assessment by examining the very return and/or document accompanying ITR
ABCAUS Case Law Citation
ABCAUS 3516 (2021) (06) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in sustaining addition on account of cash deposited in the bank as income of the appellant from undisclosed sources.
The case of the assessee was that the notice issued u/s 148 of the Income Tax Act, 1961 (the Act) for the initiation of proceeding u/s 147 and the consequent assessment order passed was illegal and bad in law.
The assessee had filed her return of income declaring income from business and profession. The said return was processed u/s 143(1) of the Act.
Later, the AO, on the basis of AIR Information came to know that the assessee had deposited large amount of cash in Savings Bank Account and also purchased property.
In view of the above information, the Assessing Officer initiated proceedings u/s 147 of the Act and notice u/s 148 of the Act was issued to the assessee.
However, despite several notices nobody attended and no details were filed. As a result, the AO had no completed the assessment on the basis of best judgment u/s 144 of the Act by making the addition for undisclosed income and investment.
The assessee challenged the assessment before the CIT(A) questioning the validity of notice u/s 148 of the Act. Additions were also challenged on merits by filing additional evidences with application to admit the same u/r 46A of the I.T. Rules.
The first appellate authority upheld the reopening of the assessment. On merits of the additions, the CIT(A) admitted the additional evidences and gave part relief.
Before the Tribunal the assessee stated that the Assessing Officer issued notice u/s 148 of the Act without any application of mind, which was bad in law and deserves to be quashed.
It was contended that no tangible material evidence had been brought on record and the Assessing Officer had only reason to suspect and not a reason to believe that income has escaped assessment.
The Tribunal opined that in a case where initial return is processed u/s 143(1) of the Act and an intimation is sent to the assessee, the reopening of such assessment, though requires the Assessing Officer to form reasons to believe that income has escaped assessment, but such reasons do not require any fresh tangible material.
The Tribunal clarified that where reopening is sought of an assessment in a situation where initial return is processed u/s 143(1) of the Act, the Assessing Officer can form reasons to believe that income has escaped assessment by examining the very return and/or document accompanying the return.
The Tribunal opined that there was no error or infirmity in issuing notice u/s 148 and initiating reassessment proceedings and upheld reopening of the assessment.
On merits, the case was restored to the file of the Assessing Officer for fresh examination.
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