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2024 (2) TMI 108 - AT - Income TaxValidity of Reopening of assessment - reasons to believe - unexplained investment in construction of house property and no return of income has been filed by the assessee for the year under consideration - information received from DDIT(Inv.) that assessee has invested more than 15 crores in construction of house property - HELD THAT:- Apparent from factual inconsistencies in the reasons recorded there is no live link between the materials and the belief of the AO that the income to the extent of more than 15 crores has escaped assessment. Apparently, there is no enquiry made by the AO to find out whether the assessee has filed return of income or not and whether the report of the DDIT(Inv.) which is stated to be the basis for reopening of assessment that the income had escaped more than 15 crores. In the course of assessment proceedings, it appears that nothing was put to assessee to explain the escaped income of 15 crores but the matter of valuation of the property constructed was referred to Valuation Officer who ultimately valued the property at Rs. 58,93,050/-. All these goes to show that absolutely there is no application of mind by the AO before recording reasons to believe that the income of the assessee had escaped assessment more than 15 crores for the assessment year under consideration. The Hon’ble Delhi High Court in the case of Pr. CIT vs. RMG Polyvinyl (I) Ltd. (2017 (7) TMI 371 - DELHI HIGH COURT) held that the information received from the Investigation Wing cannot be said to be tangible material per se without a further enquiry being undertaken by the AO and the AO deprived himself of that opportunity by proceeding on the erroneous premise that assessee had not filed a return when in fact it had. AO is not disputing that the assessee filed return of income. If this is the fact, there is certainly a factual inconsistency in reopening the assessment that the assessee has not filed any return of income. Secondly, in the reasons stated the AO believed that the income escaped assessment only based on the report of the DDIT(Inv.) that the income had escaped more than 15 crores. However, we observe that what is the basis for 15 crores is not specified in the reasons. This is only a bald statement that the income of the assessee has escaped assessment for more than 15 crores without spelling out any details which is said to have been given in the DDIT report. Therefore, the reasons recorded in the present case at best can be treated to be a reason to suspect which is not sufficient for reopening the assessment u/s 148 - The requirement of application of mind is missing the present case, there is no independent application of mind by the AO to tangible materials and reasons and the AO failed to demonstrate live link between tangible material and formation of reason to believe that income had escaped assessment. Decided in favour of assessee.
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