| The Tax Publishers2022 TaxPub(DT) 1443 (Ahd-Trib) INCOME TAX ACT, 1961
Section 147
AO made an observation that no accrued income was offered to tax against bank deposits by assessee. Further, AO had not quantified what extent of income escaped from taxation, whereas addition made by AO were on account of share application money received and unsecured loan availed of by assessee, which did not find mention in the reasons recorded by AO. Hence, reasons recorded did not satisfy provisions of section 148 which says that AO has to form reasons to believe as to escapement of income. AO failed to record proper reasons as to what extent of income chargeable to tax had escaped assessment. In the absence of same, reasons were not validly recorded, and therefore, entire reassessment proceedings were liable to be quashed.
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Reassessment - Validity - AO failed to record proper reasons as to what income chargeable tax had escaped assessment, and as to what extent the income escaped from assessment -
AO reopened assessment on the reasoning that as per the balance-sheet, total balance with the bank was to the tune of Rs. 10,12,354 and cash in hand was shown at Rs. 15,89,455, but no accrued income was offered in tax against bank deposits and thus income had escaped assessment. Thus, AO framed reassessment and made addition on account of unexplained share application money and unexplained loan. Assessee challenged validity of reassessment. Held: AO made an observation that no accrued income was offered to tax against bank deposits by assessee. Further, AO had not quantified what extent of income escaped from taxation whereas addition made by AO were on account of share application money received and unsecured loan availed by assessee, which did not find mention in the reasons recorded by AO. Hence, reasons recorded did not satisfy provisions of section 148 which says that AO has to form reasons to believe as to escapement of income. AO failed to record proper reasons as to what extent of income chargeable to tax had escaped assessment. In the absence of same, reasons were not validly recorded, and therefore, entire reassessment proceedings were liable to be quashed.
Followed:Martech Peripherals (P) Ltd. v. Dy. CIT 2017 TaxPub(DT) 1326 (Mad-HC), CIT v. Mohmed Juned Dadani (2013) 30 Taxmann.com 1 (Guj-HC) : 2013 TaxPub(DT) 967 (Guj-HC), Ranbaxy Laboratories Ltd. v. CIT 2011 TaxPub(DT) 1457 (Del-HC) and CIT v. Jet Airways (I) Ltd. 2011 TaxPub(DT) 218 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 254(1)
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