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| The Tax Publishers2020 TaxPub(DT) 0361 (Kol-Trib) INCOME TAX ACT, 1961
Section 147
It was clear from perusal of reasons recorded by AO so as to reopen assessment that it was vague and generalized report/information/allegation which had kindled suspicion in the mind of AO about systematic evasion of taxes by clients/members of NMCE by misuse of the NMCE platform, however, there was nothing in the information/report about any wrong doing by assessee. Information adverse might trigger 'reason to suspect', then AO had to make reasonable enquiry and collect material which would make him belief that there was in fact escapement of income, which unfortunately AO had not taken the burden to do and therefore, reopening and consequent reassessment was not valid in the eyes of law.
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Reassessment - Validity - Reason to believe - Vague information from investigation
AO received information from investigation wing as to evasion of taxes by clients/members of NMCE by misuse of NMCE platform through bogus commodity trading. Accordingly, AO took the view that assessee was one of the beneficiaries who have taken bogus profit through suspended/penalized brokers/members and accordingly, AO reopened assessment and made addition.Held: It was clear from perusal of reasons recorded by AO so as to reopen assessment that it was vague and generalized report/information/allegation which had kindled suspicion in the mind of AO about systematic evasion of taxes by clients/members of NMCE by misuse of the NMCE platform, however, there was nothing in the information/report about any wrong doing by assessee. Information adverse might trigger 'reason to suspect' then AO had to make reasonable enquiry and collect material which would make him belief that there was in fact escapement of income, which unfortunately AO had not taken the burden to do and therefore, reopening and consequent reassessment was not valid in the eyes of law.
Relied:CIT v. M/s. Insecticides India Ltd. in ITA Nos. 608 & 609 of 2012 pronounced on 20-5-2013 : 2013 TaxPub(DT) 2465 (Del-Trib) and Ganga Saran & Sons Pvt. Ltd. (1981) 130 ITR 1 (SC) : 1981 TaxPub(DT) 952 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
IN THE ITAT, KOLKATA BENCH
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