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2024 (2) TMI 641 - ITAT KOLKATAValidity of re-opening of assessment u/s 147 - Procedure of recording satisfaction for reopening assessment - notice beyond period of four years - bogus long term capital gain/short term capital loss - Borrowed satisfaction v/s independent application of mind - as argued no application of mind by the AO for framing the reasons and the reopening is merely on the basis of borrowed satisfaction in the form of information received from the investigation wing - HELD THAT:- We notice that the AO has not adhered to the standard procedures. Firstly, we notice that AO has only referred to the information received from the Investigation wing and assessee is stated to be one of the beneficiaries of receiving accommodation entry to avail bogus short term capital gain/loss. Now, admittedly, the return of income already stood filed by the assessee on 26/07/2013 and very much available before the AO. As incumbent upon him that after receiving the information from the investigation he should have first layed his hands on the Income tax return filed by the assessee and then should have examined the information vis-à-vis the computation of income furnished and then has to form the belief that income subject to tax has escaped assessment. Now, in the income tax return assessee has disclosed long term capital gain, but AO in the reasons recorded has mentioned short term capital gain/loss which means that he was not sure of the transactions for which the reopening is carried out. Further, AO has mentioned the figure as long term capital gain/short term capital loss. This observation is also factually incorrect because the sum is merely a sale consideration and exempt income u/s 10(38) of the Act has been claimed and it is a case of long term capital gain and not short term capital loss. The above factual observation clearly indicates that the AO has not made application of mind for re-opening the case of the assessee after four years as the assessee has furnished all the details of the alleged transactions in its income tax return. It is also evident that the AO has not adhered to the standard operating procedures framed by the CBDT to record the reasons for re-opening. As there is no independent application of mind by the AO which forms the basis of reason to believe that income has escaped assessment then such reopening of assessments is merely on borrowed satisfaction. We are inclined to hold that the reopening u/s 147 was invalid as proper procedure to record the reasons for reopening of assessment have not been followed by the Assessing Officer and there is no independent application of mind before forming the reason to believe that income chargeable to tax has escaped assessment - Appeal of the assessee is allowed.
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