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2014 (4) TMI 208 - HC - Income TaxReopening of the Assessment u/s 148 of the Act - Incorrect valuation of closing stock – valuation of shares - Accommodation entries taken from Mukesh Choksi and his related/controlled companies – Held that:- the objections are raised to the notice u/s 148 seeking to reopen the assessment, the AO has to deal with the objections on merits following the principles governing reassessment – the AO cannot brush aside the objections merely with a statement that proceedings are only initiated when AO has reasons to believe that there is an escapement of income - There is a difference between recording of reasons to believe and reassessment order - Reopening is permissible on foundation of prima facie belief but the fact alleged or the reason propounded must have some basis and should not be mere surmise, gossip or rumour - Comparison of the reason to believe communicated vide letter dated 05.09.2012 and the audit memo dated 31.03.2008 shows that the reasons are verbatim copy of the audit memo - The reasons to believe reproduce the audit memo. Relying upon G.K.N Driveshafts (India) Limited v. Income Tax Officer [2002 (11) TMI 7 - SUPREME Court] - the reassessment notice is not sustainable on the issue of valuation of closing stock - on the issue of valuation of closing stock of M/s MRPL Ltd. and taking of accommodation entries, the order is cryptic and does not deal with the objections raised, it needs to be relooked by the AO – the matter remitted back to the AO for re-examination of the issue of reopening on the ground of valuation of closing stock of M/s MRPL Ltd. and taking of accommodation entries Decided partly in favour of Assessee.
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