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2017 (9) TMI 815 - ITAT HYDERABADRe-opening of assessment u/s.147 - proceedings initiated only on the basis of the audit objection without any application of mind by the AO - reasons to believe - Held that:- For issuance of notice u/s 148 beyond a period of 4 years from the end of the relevant A.Y, it was necessary for AO to record that the income has escaped assessment on account of the failure of the assessee to disclose fully and truly all material facts necessary for assessment. We have also gone through the order sheet entries of the AO placed filed by the Revenue and there is no recording whatsoever even in the order sheet that there is escapement of income due to failure of the assessee to disclose truly and fully all material facts. The CIT (DR) has tried to justify that there is failure on the part of the assessee to disclose fully and truly all material facts by drawing our attention to the financials of the assessee but it is the AO who has to record the finding and not the CIT (DR). It has been held that the AO has to speak his mind through his order and it cannot be presumed in the absence of any such recording. In the case before us the assessee has filed the return of income for the relevant financial year and it is only from these documents that the audit party has raised its objections. Thus, there is no new material which has come to the notice of the audit party or the AO for raising such objection or forming a belief that there is escapement of income. When all the material facts were part of the record, even if there is loss of revenue, it cannot be reassessed after lapse of four years from the end of the relevant A.Y unless the loss has occurred due to failure on the part of the assessee to disclose fully and truly all material facts. Since the preconditions for initiation of proceedings u/s 147 of the Act by issuance of notice u/s 148 of the Act are not satisfied, we see no reason to interfere with the order of the CIT (A) and the Revenue’s appeal is accordingly dismissed.
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