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2024 (4) TMI 645 - ITAT MUMBAIValidity of reopening of assessment - reasons to believe - assessee has claimed huge amortization expenses on goodwill - HELD THAT:- As undisputed fact that in the reasons AO has recorded the escapement of income on account of amortization of goodwill which was not claimed by the assessee in computation of normal provisions of the Act and with regard to adjustment in book profit computed u/s 115JB of the Act AO has not disturbed the same in the order passed u/s 143(3) r.w.s. 147 of the Act. So it is very clear that the reasons recorded are without verification of the records and accordingly, without application of mind. AO has not bothered to even verify the information received with the assessment folder whether any such depreciation has been claimed by the assessee or not. It clearly reflects that the AO has mechanically recorded the reasons and issued the notice without applying his own mind. Ld. PCIT has also accorded approval u/s 151 of the Act based on the reasons recorded by the AO without ascertaining the actual facts of the case. Hon’ble Bombay High Court in case of Sharvah Multitrade Compant P Ltd. [2022 (1) TMI 372 - BOMBAY HIGH COURT] dealt with similar case and held that reassessment initiated based on reasons recorded on irrelevant facts and without application of mind cannot survive. This, in our considered opinion, it is against the settled principles of law, as reopening of an assessment is an extraordinary power available to the ld AO and it should not be done in a cavalier manner. That is why the legislature in its wisdom had put lot of restrictions by imposing conditions for seeking approval and sanction from a superior officer in terms of section 151 of the Act. AO recorded wrong facts on many count in the reasons recorded for reopening of the assessment i.e. AO recorded incorrect fact that assessee has claimed huge amortization expenses on goodwill and disallowed the same in the assessment order u/s 32 of the Act which was deleted by Ld CIT(A) by stating that no such expenses actually claimed by the assessee. The AO in the reasons also recorded incorrect fact that no assessment has been completed in this case u/s 143(3) but assessment u/s 143(3) r.w.s. 153C completed on 29/12/2017 as recorded by the AO. AO also incorrectly stated that provisions of section 147(2)(b) are applicable, whereas in the facts of the case provisions of section 147(2)(c) are applicable where the onus on AO is higher to prove escapement of income. The AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It makes clear that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment - Thus Reopening of the assessment is invalid and bad in law - Decided in favour of assessee.
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