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2021 (5) TMI 969 - HC - Income TaxReopening of assessment u/s 147 - penny stock purchases - “new ground” v/s “new reasons” - information in respect of the penny stock transaction made by assessee - HELD THAT:- Though the reopening of the assessment after expiry of four years from the end of the relevant assessment year, it is not necessary for the AO to show that, there was any failure to disclose fully or truly all material facts necessary for the assessment. When return is processed under Section 143 (1) of the Act and intimation sent to the assessee, it is not an “assessment”. Therefore, when reopening is sought of an assessment, the initial return was processed u/s 143(1) of the Act, the AO can form ‘’reason to believe’’ that income has escaped assessment by examining the return and/or the documents accompanying the return. It is not necessary in such case for the AO to come across some fresh tangible material to form ‘’reason to believe’’ that the income has escaped assessment. Applying the principle of law, in the case of Aayojan Developers [2011 (2) TMI 738 - GUJARAT HIGH COURT] to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as “new ground” or “new reasons” to supplement the reasons recorded by the AO. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. Whether AO failed to record an independent finding as to how the income has escaped assessment? - AO himself was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Tuni Textiles Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case.
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