TMI Blog2017 (4) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... sees are attempted by the Assessing Officers to be brought within the category of “understatement of income”, so as to invoke Clause (b) under Explanation 2. But to come to the conclusion that there was understatement of income, it is not sufficient for the Assessing Officers to just arrive at the percentage of gross receipts that were declared as income, without even referring to other assessees whose admitted income was at a better percentage of the gross receipts than the petitioners. Therefore, the invocation of the jurisdiction under Section 147 on the basis of suspicions and presumptions cannot be sustained. - Decided in favour of assessee. - Writ Petition Nos.36483, 37209, 37213, 37270, 37469, 37478, 37479, 37524 and 37555 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons stated in all the notices were identical and hence the reasons stated in respect of one case alone is extracted as follows as a model: It is observed that your gross receipt was ₹ 2,28,48,838/- for the AY 2013-14 and you have admitted total income amounting to ₹ 4,16,840/- which is 2.10% of your total receipt, and the income admitted is also very less compared to others who are in the same line of business. 6. The petitioners filed objections to the reasons indicated by the Assessing Officers contending that the cases would not fall under Section 147(1), as everything turned upon presumptions and surmises without any factual basis. The objections were rejected by the Assessing Officers by the orders impugned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 147 in general, and explanation- 2(b) as under: Explanation 2 For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax escaped assessment, namely (a)------- (b) where a ROI has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the FOI. 5. The notice was issued after obtaining approval from the competent Authority. The Joint Commissioner of Income Tax, Nizamabad Range has given approval vide F.No.51/JCIT/ NZB/u/s 148/2015-16 dated 12.02.2016. 6. In view of the above the objections of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to presumptions and surmises. 10. The learned Standing Counsel for the respondents/ Department took us through various decisions of the Tribunal where the similar reopening of assessments made on the same line of reasons were upheld, wherever books of accounts were not maintained, estimating the income to be 5% of the gross receipts. But it appears that in those cases, the very rationale for reopening of assessment and the very jurisdiction of the Assessing Officer to reopen assessments on the basis of such flimsy reasons, was not considered. Therefore, we cannot make a comparison of the cases on hand with cases of persons who reconciled themselves to the estimation of income at 5% of either the gross receipts or the stock available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, allowance or relief in the return. Admittedly, the cases of none of these petitioners fall under the category of claiming excessive loss or deduction or allowance or relief in the return. The cases of the assessees are attempted by the Assessing Officers to be brought within the category of understatement of income , so as to invoke Clause (b) under Explanation 2. 13. But to come to the conclusion that there was understatement of income, it is not sufficient for the Assessing Officers to just arrive at the percentage of gross receipts that were declared as income, without even referring to other assessees whose admitted income was at a better percentage of the gross receipts than the petitioners. Therefore, the invocation of the j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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