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2017 (7) TMI 963 - HC - Income TaxReopening of assessment - disallowance of loss - Held that:- From the materials on record, it can be seen that the Assessing Officer from the outset was not convinced about disallowing the sum claimed by the assessee by way of loss. He elaborated his reasons in his letter dated 06.05.2008 written to the Commissioner. Relevant portion of the letter we have reproduced in this order, perusal of which, leaves little doubt that the Assessing Officer firmly believed that the assessee’s stand on such claim of loss was correct and that the internal audit objection was invalid. If this be the position, settled law would prevent the Revenue from reopening the assessment on this ground. It is well settled that Section 147 of the Act refers to the reason of the Assessing Officer to believe that income chargeable to tax has escaped assessment. The satisfaction of the Assessing Officer is of paramount consideration and cannot be substituted by any other agency or authority even if it happens to be a higher authority. The Income Tax Act contains revision in terms of Section 263 of the Act if an order of assessment is found to be erroneous or prejudicial to the interest of the Revenue. Reopening of an assessment, however, has vastly different repercussions and entirely different parameters would apply. This was not a case where the Assessing Officer formed a belief that income chargeable to tax had escaped assessment. May be in the present case, the directives did not come from the audit party but some internal audit mechanism referred to as internal audit party. This, however, would not be of any significance. As long as it can be gathered that the Assessing Officer was compelled to issue notice of reopening against his own belief that no income chargeable to tax had escaped assessment, the notice must fail. - Decided in favour of assessee.
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