INCOME TAX ACT, 1961

Section 147

Reassessment - Reopening on basis of information emanated from investigation wing - No independent application of mind by AO -

AO received information from investigation wing as to assessee having shifted out profits on sale of shares using client code modification. Accordingly, AO reopened assessment and made addition. Held: Reasons recorded for reopening did not indicate the basis for AO to come to reasonable belief that there had been any escapement of income on the ground that modifications done in the client code was not on account of genuine error, originally occurred while punching the trade. The material available was that there was a client code modification done by assessee's broker which fact was also incorrect and there was no link from there to conclude that it was done to escape assessment of a part of its income. Therefore, AO did not apply his mind to the report of investigation wing and, as such, there were no justification to reopen assessment. Accordingly, reassessment was set aside.

Relied:CIT v. Atlas Cycle Industries (1989) 180 ITR 319 (P&H) : 1989 TaxPub(DT) 1149 (P&H-HC), Pr. CIT v. SNG Developers Ltd. (2018) 404 ITR 312 (Del-HC) : 2018 TaxPub(DT) 3140 (Del-HC), Shamshad Khan v. Asstt. CIT (2017) 395 ITR 265 (Del-HC) : 2017 TaxPub(DT) 1691 (Del-HC) and Siemens Information System Ltd. v. Asstt. CIT (2007) 293 ITR 548 (Bom) : 2007 TaxPub(DT) 1338 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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