Reopening notice u/s 148 quashed as it did not mention source of information

Reopening notice u/s 148 quashed as it did not mention source of information or reference to person giving information

ABCAUS Case Law Citation
ABCAUS 3398 (2020) (10) ITAT

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Reopening Notice u/s 148 quashed in favour of assessee

In the instant case, the assessee had challenged the validity of notice for reopening of the assessment u/s 148 of the Income Tax Act, 1961 (the Act) and was aggrieved by the additions sustained by the CIT(A).

In this case, action u/s 147 of the Act was taken and accordingly notice u/s.148 was issued. The basis for issuing the notice u/s148 was the information received from DGIT (Investigation) from which the Assessing Officer (AO) came to know that the assessee had received accommodation entries from a business group. 

The Tribunal observed that the reasons recorded nowhere mentioned the source of the information nor there was any reference to the person who had given this information.

The notice issued u/s 148 of the Act simply said “as per information” but how that information pertained to the assessment year under consideration was not known. 

The Tribunal opined that it was questionable as to how the AO came to the conclusion that income had escaped assessment which required reassessment. 

The Tribunal said that the  AO has to  give  his opinion  of escapement of income while issuing the notice and recording the reasons. However, in this case, the AO appeared to have simply carried away with a borrowed satisfaction.

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The Tribunal noted that the Hon’ble High Court had held that the AO being a quasi judicial authority is expected to arrive at subjective satisfaction independently on an objective criterion. While the report of the Investigation Wing might constitute the material on the basis of which he forms the reasons to believe, the process of arriving at such satisfaction can not be mere repetition of the report of the investigation.

In the light of the decision of the jurisdictional High Court, the Tribunal quashed the notice issued u/s 148 of the Act thereby quashing the assessment order itself.

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