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2015 (4) TMI 834 - GUJARAT HIGH COURT

2015 (4) TMI 834 - GUJARAT HIGH COURT - TMI - Reopening of assessment - as per reasons recorded the assessee has purchased bonds / debenture of ₹ 50,00,000/- during the FY 2008-09 relevant to AY 2009-10. Also the assessee has claimed high value of refund for AY 2009-10 which requires to be verified - Held that:- Considering the reasons recorded for reopening of the assessment for AY 2009-10 and even considering the affidavit in reply it appears that even as per AO investment made by the as .....

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der Section 147 of the Act are not satisfied. As per the catena of decisions while exercising the powers under Section 147 of the Act and while reopening of any assessment, the AO must form, on the basis of tangible material a tentative or prima facie opinion that there is an underassessment or escapement of income. As per the catena of decisions, a computed assessment cannot be reopened to make inquiry or further verification of the claim. After due verification and inquiry when AO forms prima .....

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S N Divatia, Adv. For the Respondent : Mr Nitin K Mehta, Adv. JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) 1.0. Rule. Shri Nitin Mehta, learned advocate waives service of notice of Rule on behalf of respondent revenue. In the facts and circumstances of the case and with the consent of the learned advocates for the respective parties, petition is taken up for final hearing today. 2.0. By way of this petition under Article 226 of the Constitution of India, the petitionerassessee has prayed f .....

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jecting the objections of the petitioner and upholding the validity of the impugned reassessment proceedings under Section 147 of the Income Tax Act (hereinafter referred to as the "Act") for AY 2009-10. 3.0. That the petitionerassessee filed her E return of Income for AY 2009-10 on 25.3.2010 declaring total income at ₹ 9,44,090/- which consisted of property income of ₹ 24,990/- and interest income of ₹ 9,19,100/-. That according to the petitioner, she derived income .....

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er also computed NIL taxable capital gain arising on sale of open plot of land after considering the exemptions u/s 54EC and 54F of the Act. That the AO finalized the assessment proceedings and passed an assessment order accepting the claims made by the assessee in her original return and granted deductions as claimed. 3.1. That thereafter, the petitioner assessee has been served with the impugned notice dated 28.3.2014 under Section 148 of the Act calling upon the assessee to submit / file retu .....

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ndent by letter dated 29.4.2014 intimated the reasons recorded for reopening of the assessment under Section 147 of the Act which reads as under: "As per AIR information, the assessee has purchased bonds / debenture of ₹ 50,00,000/- during the FY 2008-09 relevant to AY 2009-10. Also the assessee has claimed high value of refund for AY 2009-10 which requires to be verified." 3.2. That thereafter, by letter dated 12.5.2014, filed on 15.5.2014 with the respondent, the petitioner obj .....

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o tax has escaped assessment has been vitiated. On merits also, it was submitted that the assessee had invested ₹ 50 lacs in NHAI Capital Gain Tax Bonds on 15.09.2008 to take benefit of Section 54EC of the Act, against the Capital Gain earned by her. Therefore, it was requested to drop the re-assessment proceedings. 3.3. It appears that thereafter the respondent by letter dated 13.6.2014 informed the assessee that by office letter dated 29.4.2014, the first part of the paragraph of the rea .....

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2.09.2014 rejecting the objections raised by the petitioner assessee to the reopening of the assessment. 3.4. Hence, petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India challenging the impugned reassessment proceedings under Sections 147 and 148 of the Act. 4.0. Shri S.N.Divatia, learned advocate for the petitionerassessee has vehemently submitted that the impugned reassessment proceedings / opening of the reassessment under Section 147 of th .....

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Section 147 of the Act, the AO must form on the basis of material a tentative or prima facie opinion that there is an underassessment or escapement of income. It is submitted that in the present case and even in the reasons recorded for reopening, the respondent had not formed even a prima facie belief of the income having escaped assessment. It is submitted that even in the reasons recorded it is stated that the "assessee had claimed high value of refund for AY 2009-10, which requires to .....

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t of income. 4.2. It is further submitted by Shri Divatia, learned advocate for the petitionerassessee that in order to confer jurisdiction under Section 147 of the Act, it is a condition precedent that the AO must have reason to believe that income chargeable to tax has escaped assessment. 4.3. It is further submitted by the Shri Divatia, learned adovcate for the petitionerassessee that in the present case the respondent has not disputed in the order disposing the objections of the petitioner h .....

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ment. It is submitted that communication of so called paragraph 2 of the reasons recorded by the respondent vide letter dated 13.6.2014 appears to be suspicious. It is submitted that very fact that the said communication was given after about 1 month from filing the objections to the reopening by the petitioner, the same does not inspire any confidence. 4.4. It is further submitted by Shri Divatia, learned advocate for the petitioner that the impugned notice of reopening of the assessment is bad .....

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he Division Bench of this Court in the case of Shankarlal Nagji & Co & ors vs. ITO reported in (2010) 322 ITR 90(Guj). It is submitted that in the case of Chhugamal Rajpa (supra) the AO had while recorded the reasons mentioned "hence proper investigation regarding these loans is necessary", the Hon'ble Supreme Court has held the reassessment proceedings invalid. Making above submissions and relying upon above decisions, it is requested to allow the present Special Civil App .....

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ted 13.6.2014 (both paragraph mentioned in the said communication) as reasons recorded for reopening of assessment for AY 2009-10. 5.1. It is further submitted by Shri Mehta, learned advocate for the Revenue that in the facts and circumstances of the case, more particularly, when in the case of the assessee there was no assessment under Section 143(3) of the Act and no order under Section 143(3) of the had been passed and the AO formed an opinion that the income had escaped assessment, initiatio .....

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gh value of refund had escaped examination. It is submitted that therefore, AO is justified in reopneing the assessment. Making above submissions and relying upon the first affidavit in reply as well as second affidavit in reply of the respondent, it is requested to dismiss the present Special Civil Application. 6.0. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that by way of this petition under Article 226 of the Constitution of Ind .....

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Y 2008-09 relevant to AY 2009-10. Also the assessee has claimed high value of refund for AY 2009-10 which requires to be verified." 6.1. However, after the petitionerassessee submitted the objections against the aforesaid reasons recorded petitioner was communicated vide communication 29.4.2014 that "only the first paragraph of the reasons recorded" for reopening the assessment was communicated, however "second paragraph of the reasons recorded" was inadvertently not com .....

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; 6.2. Considering the additional affidavit in reply and on considering the original file we believe the case on behalf of the revenue / respondent that second paragraph of the reasons recorded was inadvertently not communicated. Thus, both the aforesaid paragraphs be treated and considered as reasons recorded for reopening of the assessment for AY 2009-10. 7.0. Having heard the learned advocates for the parties and considering the aforesaid reasons recorded for reopening of the assessment for A .....

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aid was required to be verified. Therefore, as such the condition precedent for reopening of the assessment under Section 147 of the Act are not satisfied. As per the catena of decisions while exercising the powers under Section 147 of the Act and while reopening of any assessment, the AO must form, on the basis of tangible material a tentative or prima facie opinion that there is an underassessment or escapement of income. As per the catena of decisions, a computed assessment cannot be reopened .....

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