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2015 (10) TMI 313 - AT - Income TaxReopening of the assessment - Held that:- Section 147 clearly says that if the Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment for any assessment year, he may issue notice under Section 148 of the Act to assess or reassess such income. Explanation 2(b) to Section 147 of the Act clearly says that understating of income or claiming excess loss, deduction, allowance or relief in the return is also deemed to be escapement of income. What is necessary is that the Assessing Officer has reason to believe that the income chargeable to tax has escaped assessment. Therefore, it is obligatory on the part of the Assessing Officer to record his reason which made him to believe that the income chargeable to tax has escaped assessment for any assessment year. In this case, the Assessing Officer reopened the assessment by issuing notice under Section 148 of the Act to verify whether the borrowal was for business purpose and whether the assessee claimed excess deduction. The Assessing Officer has not formed any opinion that the assessee claimed excess deduction thereby the income otherwise chargeable to tax escaped assessment. This Tribunal is of the considered opinion that to verify or to consider whether the assessee claimed excess deduction or borrowed loan for business purpose, the concluded assessment cannot be reopened. In view of the language employed by the Parliament in Section 147 of the Act, the Assessing Officer has to necessarily record the reason which made him to believe that the assessee claimed excess deduction or loss. In the absence of any such observation by the Assessing Officer in the reason for reopening the assessment, this Tribunal is of the considered opinion that reopening of the assessment is not justified. Accordingly, the order of the CIT(Appeals) confirming the reopening of assessment, is set aside and cross-objections for both the assessment years are allowed. - Decided in favour of assessee.
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