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2019 (3) TMI 679 - AT - Income TaxValidity of the reopening of the assessment - no addition based on alleged reasons to belief that assessee in receipt of accommodation entry of loss from Mahanagar Group - Power of AO to make other addition u/s 147 proceedings - HELD THAT:- AO has not made any addition/disallowance on the issue. So, without making any addition/disallowance on this accommodation entry for loss the AO ought not to have proceeded to re-assess the assessee on other incomes like the addition of STCG and disallowance u/s 14A. The jurisdictional fact which empowered the AO to invoke the jurisdiction to reopen by issue of notice u/s. 148 r.w.s. 147 as deciphered from the reasons recorded is the accommodation entry of loss. So, when AO desired to reopen this assessment year, he had information of assessee in receipt of accommodation entry of loss from Mahanagar Group, which fact was recorded to re-open the assessment. This precise fact was the foundation based on the information from Director of income Tax and the AO recorded the reason which warranted him to hold the belief that income chargeable to tax has escaped assessment and thereafter, the AO usurped the jurisdiction to reopen the assessment. Words is the ‘income’ which according to the AO escaped assessment while recording reasons for reopening assessment u/s 147 r.w.s. 148. This ‘income’ which AO records in his reasons recorded has escaped assessment and which constituted the bedrock/basis for reopening is the jurisdictional fact which empowered him to usurp the jurisdiction to reopen and reassess the escaped income as contemplate u/s 147/148. So, when that income which was the foundation on which he based his belief of escapement of income is absent /disappeared then the AO’s very usurpation of jurisdiction is on non-existing jurisdictional fact which renders his usurpation of jurisdiction to reopen the assessment legally untenable and so null in the eyes of law and therefore, the assessee succeeds and therefore, we quash the reassessment made by the AO without jurisdiction. - decided in favour of assessee.
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