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TMI Blog2016 (9) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the assessee has filed its return of income on 1.11.2004 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 11.10.2004 which was duly served upon the assessee. The ld.AO has passed the assessment order under section 143(3) of the Act dated 16.11.2006 and determined the taxable income of the assessee at Rs. 2,82,080/-. The ld.AO harboured a belief that income has escaped from taxation, therefore, he recorded his reasons and issued notice under section 148 of the Income Tax Act dated 27.3.2009. The reasons are available at page no.26 of the paper book. It is pertinent to take note of the reasons, in order to appreciate, whether the ld.AO has suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing materials, consumable, stores & spares by systematic sway in format prescribed by companies Act. Further, the assessee has not furnished cogent or corroborative evidence to justify the decline in GP. In view of defects in, books of account verification of inventory and discrepancy therein as observed by the auditor and also assessee's failure to offer plausible explanation and cogent evidence in respect of fall "in GP provision of section 145 are applicable and according GP is to be estimated on verification." Date : 19.03.2009 Sd/- (S.R.Pande) Income Tax Officer, Wd-4(4) Baroda." The ld.AO has passed the assessment order on 24.12.2009 and determined the taxable income at Rs. 17,33,060/-. The ld.AO has made addition of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Appellate Authority has taken cognizance of this decision and made reference of the law lay down by the Hon'ble Gujarat High Court in the case of Praful Chunilal Patel, 263 ITR 832. She also pointed out that the ld.First Appellate Authority has made reference to the decision of Hon'ble Madras High Court who has taken into consideration the decision of the Hon'ble Supreme Court in the case of Kelvinator India Ltd. (supra). She drew our attention towards para 4.1.4 of the order, and contended that if on appraisal of the material available with the AO, it came out that income has escaped assessment, then, the AO would be justified to form a belief that assessment required to be reopened by issuance of notice under section 148 of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm for the purposes of Section 147 of the Act. In other words, in such event, there is no occasion for the AO to form an opinion after examining the documents enclosed with the return whether in the form of balance sheet, audited accounts, tax audit report etc. 35.2 The first proviso to Section 147 of the Act applies only (i) where the initial assessment is under Section 143 (3) of the Act and (ii) where such reopening is sought to be done after the expiry of four years from the end of the relevant assessment year. In other words, the requirement in the first proviso to Section 147 of there having to be a failure on the part of the Assessee "to disclose fully and truly all material facts" does not at all apply where the initial return ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act and an intimation is sent to the Assessee, the reopening of such assessment no doubt requires the AO to form reasons to believe that income has escaped assessment, but such reasons do not require any fresh tangible material. 35.7 In other words, where reopening is sought of an assessment in a situation where the initial return is processed under Section 143 (1) of the Act, the AO can form reasons to believe that income has escaped assessment by examining the very return and/or the documents accompanying the return. It is not necessary in such a case for the AO to come across some fresh tangible material to form 'reasons to believe' that income has escaped assessment. 35.8 In the assessment proceedings pursuant t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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