2023 (3) TMI 606 - AT - Income Tax

Validity of reopening of assessment - Reopening made beyond four years - nexus between the information received by the Assessing Officer and the escapement of income - information regarding premature surrender of L.I.C Policy - HELD THAT:- The Tribunal in assessee’s husband’s case [2023 (3) TMI 265 - ITAT AHMEDABAD] AO needed to conduct some more inquiry, determine the quantum of income which the assessee had been returning in the past years, and whether considering his life style and other factors he could have reasonably accumulated the amount to the extent of Rs.10 lakhs for making investment in LIC premium. He ought to have sought explanation from the assessee of the source of investment, and if his inquiries and investigation would have not satisfied him only in such circumstances, the AO could have formed belief of escapement of income on account of source investment in LIC premium remaining unexplained. I am therefore in complete agreement with the contention of the ld.counsel for the assessee that the information in the possession of the AO could not have lead to belief of escapement of income so as to assume valid jurisdiction to reopening the case of the assessee under section 147 of the Act.

CIT(A) has proceeded on the exactly wrong premise as that on which the AO had proceeded that the source of investments is to be co-related or explained through income earned during the year, that is why, the ld.CIT(A) has noted that the AO had verified the returned income and the amount of investment and had rightly come to the conclusion that the assessee had no sufficient source of making such investment. Jurisdiction assumed under section 147 to be invalid, the assessment order passed, as a consequence is not sustainable in the eyes of law and without jurisdiction. Therefore, the same is directed to be set aside.Appeal of the assessee is allowed.