2021 (10) TMI 606 - AT - Income Tax

Reopening of assessment u/s 147 - bogus purchases - Estimation of income - HELD THAT:- We find that at the stage of issue of notice, the A.O. was not sure whether the assessee availed the alleged accommodation entry of unsecured loan or of alleged bogus purchases. There has to be a reasonable material before the AO on the basis of which a reasonable person can make requisite belief. The A.O. issued notice under section 148 in absence of reasonable material to form a reasonable belief that income has escaped tax. Under the circumstances, the action of the A.O. of reopening assessment in exercise of the power under section 148 of the Act cannot be sustained. Accordingly, we quash the re-assessment proceeding initiated in the case of the assessee. As we have quashed the reassessment, therefore, adjudication on the additions have become academic. In the result the Ground No. 1 of assessee’s appeal is allowed.