2013 (1) TMI 517 - BOMBAY HIGH COURT

Reopening of assessment - non offering to tax an unapportioned claim recovery representing the amount received from foreign countries - whether there is reason to believe on the part of the AO that income had escaped assessment? - Held that:- All that is relevant at this stage is whether there is reason to believe on the part of the Assessing Officer that income had escaped assessment which is affirmative. It would not be appropriate for this Court to preempt an enquiry whatsoever by the AO, once a tangible basis has been disclosed for reopening the assessment

Similarly, in respect of the revision of pay scales, the AO has sought to reopen the assessment on the ground that the liability had not crystallized before the balance-sheet date. Here again, it is apparent that there has been no application of mind to the relevant facts by the Assessing Officer during the course of the assessment proceedings. As regards the first ground, on the basis of which the assessment is sought to be reopened, it has been sought to be urged that under Section 44 read with Rule 5(a), it would not be open to the Assessing Officer to make an income addition. Moreover, it has been urged that in the past, the same practice had been accepted by the Revenue. These are matters which on merits will be considered by the Assessing Officer and it would be inappropriate for this Court to express any opinion on the merits of issue.

Moreover, once the Court has come to the conclusion that even a single ground on the basis of which the assessment is sought to be reopened is valid and within jurisdiction, the notice for reopening of the assessment would have to be upheld. Consequently,though submissions have been urged on the merits of each of the grounds, keeping all rights and contentions of the parties open to be urged before the AO, once the assessment is reopened in exercise of the power conferred by Section 147. The AO has acted within jurisdiction in reopening the assessment - no case for interference under Article 226 of the Constitution is made out - against assessee.