Reopening for not replying enquiry letter issued on AIR basis to verify source of investment in the property held invalid for non application of mind by the Assessing Office.
ABCAUS Case Law Citation:
ABCAUS 2098 (2017) (10) ITAT
The Challenge/Grievance:
This appellant assessee had challenged the order of CIT(A) upholding the reopening and the assessment made u/s 144/147 of the Income Tax Act, 1961 (Act) by the Assessing Officer (AO) as illegal and without jurisdiction.
Reasons recorded:
The reasons recorded by the AO stated that as per the AIR information, the assessee had purchased property and to verify the source of investment in the property, letters were issued to the assessee with direction to produce copy of ITR. However, no reply was submitted by the assessee nor the hearing fixed was attended which indicated that the assessee was intentionally avoiding furnishing the source of investment called for.
Thus in view of the non reply of the asssessee to the enquiry letter, the AO concluded that there were reasons to believe that the income chargeable to tax had escaped assessment within the meaning of section 147 of the Act.
Observations made by the Tribunal:
According to the Tribunal, the AO did not assign any valid reasons to show that income of the assessee had escaped assessment.
The ITAT observed that a bare reading of the reasons recorded by the AO, it was quite evident that the AO had not applied his mind while recording his reasons and vague reasons without the application of mind could not give jurisdiction to the AO.
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