2019 (5) TMI 430 - ITAT KOLKATA

Reopening of assessment u/s 147 - ‘reasons to believe’ as not synonymous to ‘reason to suspect’ - borrowed satisfaction - original assessment u/s 143(1) - assessee had suppressed its income by using LTCG treating it as exempted which is/are reported as bogus by the directorate - HELD THAT:- When the AO was in receipt of the information from the DIT(Inv.) he ought to have made reasonable enquiry and collect materials which would make him believe, that there is escapement of income. As stated earlier, it has to be remembered that information is not synonymous to truth. At the cost of repetitions, we note that AO simply on the basis of the investigation report of DIT (Inv.) has jumped into conclusion that there is an escapement of income which is erroneous since it does not satisfy the jurisdictional fact and law for reopening as envisaged u/s. 147

AO simply taking note of the DIT(Inv.) letter has borrowed the satisfaction without independent application of mind to form reason warrant holding a belief that income chargeable to tax has escaped assessment. Just because a letter has been received from the DIT(Inv.) the AO cannot reopen the assessment even if original assessment was u/s. 143(1).

AO based on the reasons recorded as set out above could not have initiated a fishing enquiry to find out the veracity of the information given by the DIT(Inv.). The reasons recorded by AO does not stand the test as laid by plethora of judicial precedence as discussed above which is sine qua non to assume jurisdiction u/s 147 we find that the reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. Since the AO failed to validly assume jurisdiction u/s. 147 the assumption of jurisdiction by him to re-open the assessment itself is qorum non judice and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed by him.

AO had made some enquiry (Pre-reopening) at least then he would have definitely stumbled across the order of the Tribunal passed in ACIT Vs. Swastik S. Ghuwalewala [2013 (5) TMI 1005 - ITAT KOLKATA] wherein the Tribunal has held that the purchase and sale of shares of M/s. Bakra Pratisthan Ltd. (M/s. BPL) is not bogus vide order dated 23.05.2013 and we note that the instant reopening notice was issued by AO on 28.03.2017. So in the light of Tribunal order in respect to the scrip in lis, question of reopening would arise or not at the first instance should have been taken independent by the AO - Decided in favour of assessee.