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2019 (6) TMI 1564 - AT - Income TaxReopening of assessment u/s 147 - admission of additional ground - formation of belief about escapement of income - HELD THAT:- In view of the decision of Hon’ble Supreme Court in the case of National Thermal Power Corporation [1996 (12) TMI 7 - SUPREME COURT] and in the interest of substantial justice, we admit the Additional Grounds of appeal and the parties were allowed to argue the appeal on merits of the case. The facts of the case are that the assessee belongs to Harshad Mehta Group and was notified under the Special Court (Trial of offences relating to transactions in Securities) Act, 1962. AO observed that the assessee did not file the return of income in time for the year under consideration as provided u/s.139(1). The incorrect fact being the return not having been filed by the assessee. As pointed out that even if it is accepted that incorrect noting about the absence of return filed was not the only basis for formation of belief, the AR relied upon the judgment of the Hon'ble Gujarat High Court in the case of Sagar Enterprises [2001 (12) TMI 18 - GUJARAT HIGH COURT] to contend that in such a situation also, the recording of reasons is untenable. The Hon'ble Gujarat High Court noted that once there was a factually incorrect basis about the formation of belief about escapement of income, such reasons could not be taken to be valid even if the alternate reasons relied upon may be correct. As per the Hon'ble High Court, in such a situation it could not be said with certainty as to which factor weighed with the Assessing Officer to form a belief about escapement of income. Thus,recording of reasons is based on an incorrect assumption of fact, the same invalidates the formation of belief envisaged under Section 147/148 of the Act. As a consequence thereof, the assumption of jurisdiction under Section 147/148 of the Act is untenable and is liable to be set-aside - assumption of jurisdiction under Section 147/148 of the Act is untenable and is liable to be set-aside. Appeal of the assessee is allowed.
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