2022 (1) TMI 332 - AT - Income Tax

Reopening of assessment u/s 147 - eligibility of reasons to believe - disallowing of loss - HELD THAT - The assessee has filed her return of income. AO has not made any analysis on what the assessee has claimed how prima-facie the claim of the assessee could be bogus on the basis of the information supplied by the Investigation Wing and therefore an income appears to have been escaped - Section 147 of the Act nowhere authorizes the AO to reopen an assessment for verification of the claim made by the assessee. AO is required to analyze the information possessed by him within the light of information supplied by the assessee in the return of income and thereafter he has to form a prima facie opinion that such and such income appears to have escaped from assessment. In the reasons he has nowhere even mentioned what is the loss or gain claimed by the assessee in such transactions. The assessee has filed her return of income. AO has not made any analysis on what the assessee has claimed how prima-facie the claim of the assessee could be bogus on the basis of the information supplied by the Investigation Wing and therefore an income appears to have been escaped Section 147 nowhere authorizes the Assessing Officer to reopen an assessment for verification of the claim made by the assessee. AO is required to analyze the information possessed by him within the light of information supplied by the assessee in the return of income and thereafter he has to form a prima facie opinion that such and such income appears to have escaped from assessment. In the reasons he has nowhere even mentioned what is the loss or gain claimed by the assessee in such transactions. In the present case there is no prima-facie opinion formed by the Assessing Officer before issue of notice under Section 148 of the Act; therefore the reopening of the assessment is bad in the eyes of law. - Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment
2. Disallowance of loss claimed by the assessee

Reopening of Assessment:
The assessee appealed against the order of the Commissioner of Income-tax (Appeals) for Assessment Year 2009-10, challenging the reopening of the assessment and the disallowance of a loss. The Assessing Officer reopened the assessment based on information received regarding the assessee's transactions through a specific company. The Assessing Officer made an addition of Rs. 12,05,353 by disallowing the claimed loss. The assessee contended that there was no proper application of mind by the Assessing Officer in reopening the assessment. The assessee argued that the reasons recorded for reopening lacked analysis and were speculative. The Assessing Officer did not form a prima facie opinion that income had escaped assessment. The Tribunal noted that Section 147 of the Income-Tax Act requires the Assessing Officer to have a valid reason to believe that income has escaped assessment. The Tribunal held that the reasons recorded did not show proper analysis or justification for reopening the assessment. The Tribunal referred to relevant case laws and concluded that the reopening of the assessment was not justified. Therefore, the Tribunal allowed the appeal and quashed the reassessment order.

Disallowance of Loss Claimed by the Assessee:
The second issue revolved around the disallowance of the loss claimed by the assessee. The Assessing Officer disallowed the loss of Rs. 12,05,353, leading to the appeal by the assessee. The Tribunal's decision primarily focused on the first issue of reopening the assessment. As the Tribunal found the reopening of the assessment to be unjustified, it did not delve deeply into the specific details of the disallowance of the loss. The Tribunal's decision to allow the appeal based on the reopening issue rendered the disallowance of the loss moot in this case.

In conclusion, the Appellate Tribunal ITAT Ahmedabad, in its judgment, addressed the issues of reopening the assessment and the disallowance of the claimed loss by the assessee. The Tribunal found the reopening of the assessment to be unjustified due to a lack of proper analysis and justification by the Assessing Officer. Consequently, the Tribunal allowed the appeal and quashed the reassessment order, without delving extensively into the disallowance of the loss claimed by the assessee.