Reopening u/s 148 without forming belief that income has escaped assessment bad in law

Reopening u/s 148 for mere non disclosure of bank account in ITR without forming belief that income has escaped assessment, bad in law

ABCAUS Case Law Citation:
ABCAUS 2952 (2019) (05) ITAT

Important Case Laws Cited/relied upon by the parties
G.K. N. Driveshafts (India) Ltd. vs. ITO (2003) 259 ITR 19 (SC)
Pr. CIT vs. Jagat Talkies Distributors
Ravindra Deo Tyagi vs. Income Tax Officer

The assessee had challenge the validity of both the lower authorities’ action taking recourse to section 148 r.w.s. 147 for re-opening of his case.

The assessee contended that the Assessing Officer (AO) had erred in initiated the impugned proceedings without forming any reasonable belief of his taxable “income” having escaped assessment.

He also argued that the Assessing Officer never supplied copy of the re-opening reasons despite many requests which according to the judgment of the Hon’ble Apex Court in G.K. N. Driveshafts (India) Ltd. vitiated the reassessment.

 The assessee contended that from the re-opening reasons it was clear that the Assessing Officer had not been formed any belief of his taxable income having escaped assessment based any tangible material. The Assessing Officer had merely observed that the assessee had made huge transactions in his bank account(s) not shown in the respective returns.

Mere non disclosure of bank account not a valid reason for reopening

The Tribunal noted that there was hardly any dispute that the Assessing Officer had recorded his re-opening reasons on the ground that the assessee’s bank accounts allegedly not shown in the return had seen huge transactions. There was admittedly no record of such transactions or sums involved therein which could be taken as the taxpayer’s taxable income having escaped assessment.

On the question whether the Assessing Officer could initiate impugned proceedings on the account of the mere fact that the assessee had made transactions not disclosed in his return, the Tribunal noted that on similar issue, the Tribunal had held that such re-opening reasons in absence of any taxable income having escaped assessment do not withstand the test of law.

Non supply of reasons recorded vitiated the reassessment

With respect to the issue of not supply of reasons recorded to the assessee, the Tribunal noted that the Hon’ble High Court had held that on account of failure by the AO to furnish reasons for reopening of the assessment under Section 148 of the Act to the Assessee, the reassessment proceedings stood vitiated in law.

Accordingly, the Tribunal we annulled the impugned re-opening / re-assessment proceedings u/s 148 r.w.s. 147 of the Act.

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