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2022 (4) TMI 618 - AT - Income TaxValidity of Reopening of assessment u/s 147 - absence of sanction from the appropriate authority - reopening after a period of four years from the end of the relevant assessment year - Whether proceedings have been initiated by the AO without application of independent mind on the material? - HELD THAT:- A perusal of clause (b) of explanation-2 clearly shows that the same is applicable in a case where a return has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return - perusal of the paper book filed on behalf of the assessee shows that the original assessment has been completed u/s 143(3) on 03.12.2010 by the Income Tax Officer, Ward-13, New Delhi for the impugned assessment year. Therefore, it is clear that the AO without application of mind and on the basis of report of the Investigation Wing and without verifying the assessment records wherein, the original assessment was completed u/s 143(3), has reopened the assessment. Therefore, the very initiation of proceedings by invoking clause (b) of Explanation-2 of section 147 renders the reassessment proceedings invalid and consequently, such reassessment proceedings have to be quashed on account of non-application of mind before reopening of the assessment. AO after analyzing the various details filed by the assessee, passed the order u/s 143(3) of the Act without drawing any adverse inference in respect of amount of ₹ 15 lakhs brought from M/s Shalini Holdings Ltd. find the AO in the reasons recorded had merely stated that there is failure to disclose fully and truly all material facts necessary for the completion of the assessment for the AY 2008-09, However, he has not specifically mentioned which particular has not been disclosed by the assessee. This in our opinion does not satisfy the statutory pre-conditions provided in section 147 of the Act. As held in various decisions that the reasons must indicate how and why the assessee has failed to make the full and true disclosure of all material facts necessary for completion of assessment and mere repetition or quoting the language of the proviso is not sufficient. The basis of the averment or statement should be either stated or should be apparent or explained from the record. However, in the instant case, as mentioned earlier, the reasons do not satisfy which material facts the assessee failed to disclose during the original proceedings. AO has invoked clause (b) of Explanation-2 of section 147 of the Act, which is not applicable in the instant case and further considering the fact that the AO has merely stated that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment without specifying which material, the assessee has not disclosed, especially when every issue was examined during the course of original assessment u/s 143(3) by calling information u/s 133(6), which was complied with by the investing company, thus hold that the reassessment proceedings initiated by the AO and upheld by the Ld. CIT(A) is not in accordance with law - Decided in favour of assessee.
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