TMI Blog2017 (2) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinabove. The basis for recording the reasons for reopening the assessment is the audit objection raised in the case of assessee. The Assessing Officer while passing assessment order dated 23-03-2015 categorically admits that “however consequent upon audit objections by the internal audit party vide their audit query dated 02-02-2012, the case was reopened u/s 148 after obtaining prior approval of the Commissioner of Income-tax-II, Nashik.” where the initiation of reassessment proceedings are on the basis of audit objection and not on the basis of independent satisfaction of Assessing Officer and hence not valid, is the issue before us. The reassessment proceedings initiated in the case are without any jurisdiction as the Assessing Officer had no occasion to believe that there was escapement of income in the hands of the assessee and hence no merit in recording of reasons for reopening the assessment under section 147 and issue of notice under section 148 of the Act and thereafter completion of assessment under section 143(3) r.w.s.147 of the Act. Hon’ble High Court of Calcutta in the case of Berger Paints India Ltd. Vs. ACIT [2009 (8) TMI 557 - CALCUTTA HIGH COURT] on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 148. The issue was orally raised during the course of assessment proceedings soalso at the appellate stage. However, the AO had turned down without incorporating in the body of the assessment order. (8) The ld. CIT(A) has erred on facts and in law in not appreciating that the reassessment proceedings were initiated and finalised by the same AO who had framed the original assessment order and he had made an addition of ₹ 50,000/- u/s. 40A(3) at the original stage and thereafter in reassessment, further addition of ₹ 7,93,556/- was made. It is nothing but a review of original assessment order . (9) The ld. CIT(A) has erred on facts and in law in giving irrelevant findings in para 6.2 of the appellate order that lithe appellant firm is in the business of transportation and it was expected of the appellant to be more vigilant and appellant has failed to discharge its onus with regard to relevant provisions . Actually, business of the assessee is to deal in kerosene and fertilizers. (10) . The Ld CIT(A) has failed to consider and appreciate the binding judicial precedent relied upon by the appellant . These decisions were merely rejected withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter assessment was completed u/s.143(3) r.w.s. 147 of the Act on total income of ₹ 13,56,327/-. The assessee is aggrieved by the reassessment proceedings initiated in the case. The Assessing Officer while passing the assessment order also refers to the audit queries and the information/books produced by the assessee thereafter and worked out the disallowance under section 40A(3) of the Act at ₹ 7,93,559/- and under section 40(a)(ia) of ₹ 5,72,768/-. 6. Before the CIT(A) assessee raised the issue only on merits and no issue was raised against reopening of assessment under section 147/148 of the Act. However, in the written submissions assessee questioned the validity of reopening of the assessment on the basis of objection raised by the internal audit party. The CIT(A) dismissed the contention of the assessee as no such stand was taken before the Assessing Officer during the reassessment proceedings. The CIT(A) held that the objection of the assessee on the validity of reassessment proceedings was not tenable at the appellate stage. 7. The Ld. Authorised Representative for the assessee pointed out that there is error in the order of CIT(A) as the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the same, the Assessing Officer has no jurisdiction to proceed under section 147 of the Act. 10. In the present case the assessee had furnished return of income declaring total income of ₹ 1,43,660/- which was processed under section 143(1) of the Act and also assessment was completed under section 143(3) of the Act on 17-11-2011 on assessed income of ₹ 2,85,950/-. Thereafter on 04-09-2014 the Assessing Officer records the reasons for reopening the assessment under section 147 of the Act, copy of which is placed at pages 426 of the paper book, in which he lists out the details of payment made exceeding ₹ 20,000/- in cash totalling ₹ 8,75,990/-. The Assessing Officer also records that the assessee had made payment of transportation charges exceeding ₹ 50,000/- to various persons totalling ₹ 13,66,327/-. In view of the default under section 40(a)(ia) and 40A(3) of the Act, the Assessing Officer records reason to believe that aggregate income to the tune of ₹ 14,48,758/- had escaped assessment and hence the proceedings under section 147 of the Act. In the reasons recorded for reopening the assessment which are placed on record, he fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the Assessing Officer while passing the order under section 143(3) r.w.s. 147 of the Act admits that consequent to the assessment order passed u/s.143(3) of the Act, audit objections by internal audit party vide their audit query No.ITO(AUDIT)- II/NASHIK/2011-12/1085/61 dated 02-02-2012 was received and the case was reopened under section 148 of the Act after obtaining prior approval of the Commissioner of Income Tax-2, Nashik. The assessee had furnished a letter requesting the Assessing Officer to treat the original return of income filed as filed under section 148 of the Act. Once the assessee had complied to the provisions of section 148 of the Act, i.e. by filing the return of income, the assessee is entitled to question the reasons to believe that the income has escaped assessment. Though the reasons to believe as noted by the Assessing Officer do not reflect any mention of audit objection raised in the case but the sequence of events of the proceedings before the Assessing Officer, after completion of the assessment under section 143(3) of the Act, subsequent notice issued under section 154 of the Act and the preliminary observations of the Assessing Officer in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hence not valid, is the issue before us. 16. We find support from the ratio laid down by the Hon ble Supreme Court in the case of Indian Eastern Newspaper Society Vs. CIT reported in 119 ITR 0996 wherein the Hon ble Supreme Court held that the information referred to in section 147 of the Act contemplates information as to the law created by formal source. The Hon ble Supreme Court further held that opinion of the internal party on a point of law does not constitute information for the purpose of section 147(b) of the Act. Applying said principle to the facts of the case, I hold that the reassessment proceedings initiated in the case are without any jurisdiction as the Assessing Officer had no occasion to believe that there was escapement of income in the hands of the assessee and hence no merit in recording of reasons for reopening the assessment under section 147 and issue of notice under section 148 of the Act and thereafter completion of assessment under section 143(3) r.w.s.147 of the Act. 17. Another aspect of the issue is the basis on which notice under section 154 of the Act was issued to the assessee and thereafter on the same basis the Assessing Officer initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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