TMI Blog2015 (4) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 facie opinion that income chargeable to tax has escaped assessment in that case only the reopening of assessment under Section 147 of the Act is permissible. The things which are yet to be verified, on that the AO cannot have a subjective satisfaction that income chargeable to tax has escaped assessment. That will be putting a cart before horse - Decided in favour of assessee. - Special Civil Application No. 16995 of 2014 - - - Dated:- 1-4-2015 - M. R. Shah And S. H. Vora,JJ. For the Appellant : Mr 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 conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of Section 147 of the Act. Having served with the notice under Section 148 of the Act, the petitioner communicated to the AO vide letter dated 28.4.2014 to consider the return filed on 25.3.2014 as return in response to the impugned notice and also given the copy of reasons recorded for reopening. That respondent 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 objected the validity of the impugned notice under Section 148 of the Act and proceedings initiated under Section 147 of the Act, contending inter alia that as per the reasons recorded which was communicated to the petitioner vide communication dated 29.4.2014, even according to the AO the claim made by the assessee with respect to investment in bonds/ debenture of ₹ 50 lacs was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 be verified . It is submitted that even according to the respondent the things were yet to be verified. It is submitted that therefore, as such there was no material on record for the AO to form such belief that the income had escaped any assessment. It is submitted that there has to be some material pointed out by the respondent on the basis of which he / she may entertain such belief, because there has to be a rational or intelligible nexus between the material and the belief of escapement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the earlier communication dated 29.4.2014. Therefore, it is requested to consider the communication dated 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, initiation of reopening of assessment is absolutely just and proper. 5.2. It is further submitted by Shri Mehta, learned advocate for the revenue that on considering the material on record the AOrespondent doubted the source of fund for investment in bonds and the claim of high value of refund. It is submitted that since no assessment under Section 143(3) of the Act had been completed in the case of petitioner assessee the issue of examining the source of funds for investment in bonds and the claim of high value of refund had escaped examination. It is submitted that therefore, AO is justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and even considering the affidavit in reply it appears that even as per AO investment made by the assessee in certain bonds as well as high value of refund sought by her required deeper verification. If that be so and in that case, subjective satisfaction and / or belief of the AO while reopening the assessment that the income chargeable to tax has escaped assessment has been viatiated. Even according to the respondent and in the reasons recorded for reopening of assessment, the aforesaid 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 to make inquiry or further verification of the claim. After due verification and inquiry when AO forms prima facie opinion that income chargeable to tax has escaped assessment in that case only the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X
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