ITAT: Authority Can’t Open Assessment Without Tangible Proof of Income

A Single Bench of the Income Tax Appellate Tribunal (ITAT) Pune, ruled that the Assessing Officer (AO) cannot reopen an assessment without tangible material showing escapement of income.

The taxpayer is the owner of Sikandar and Company a company that incurs the income from trading on the wholesale and semi-wholesale basis and Cattle feed items.

The taxpayer furnishes the return that shows the sum of the income of Rs 21,000. AO finds out the total income of the taxpayer at Rs 8 lacs under Section 143(3) of the Income Tax Act, 1961. The assessment was again started under Section 148 of the Income Tax Act, 1961 for recording reasons.

The counsel for the taxpayer mentioned, the taxpayer shows the material in the original assessment proceedings and opening again would be the opinion amendment.

Under Section 147 of the Income Tax Act, 1961 the reassessment specified is not valid for the case that there was no sign of the taxpayer’s failure of showing all the related facts. For this case, the AO does not specify any tangible material for reopening, and the taxpayer who unable to show the related facts.

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The Bench comprises SS Viswanethra Ravi, Judicial Member sees, “Admittedly, there is no date reflected on the order sheet on which day the AO has recorded the reasons for initiating proceedings under Section 147 of the Income Tax Act, 1961.

In the present case, I find no such tangible material came to the knowledge of AO which resulted in a conclusion that there is an escapement of income from the original assessment.”

The tribunal mentioned that “Therefore, the AO has no jurisdiction to reopen the assessment in the absence of any tangible material showing the escapement of income. Thus, the reassessment framed by the AO fails and as confirmed by the CIT(A) is not justified”