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2017 (4) TMI 768 - ANDHRA PRADESH HIGH COURT

2017 (4) TMI 768 - ANDHRA PRADESH HIGH COURT - TMI - Reopening of assessment - Held that:- In the order rejecting the objections, the Assessing Officer has relied upon Clause (b) under Explanation 2 to Section 147. Clause (b) under Explanation 2 to Section 147 deals with cases where a return of income has been furnished by the assessee but no assessment has been made and the Assessing Officer notices that the assessee has understated the income or has claimed excessive loss, deduction, allowance .....

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t 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 2016 - Dated:- 13-2-2017 - V. Ramasubramanian And .....

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nding Counsel appearing for the respondents. 3. The petitioners in these writ petitions were issued with notices under Section 148 of the Act on various dates. In the notices which were in the printed form, it was stated that the Assessing Officers had reason to believe that there was income chargeable to tax relating to the relevant assessment years which had escaped assessment within the meaning of Section 147 of the Act and that therefore the petitioners should file a return in the prescribed .....

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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), .....

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the I T Act, 1961 to suggest that an AO cannot reopen an assessment where he had failed to investigate and find out fact of the case truth at initial stage. Reliance is placed on the decision of Hon ble High Court in the case of Ramprasad vs. AO (1995) 82 Taxman 199 (Allahabad). The Hon ble Supreme Court in the case of ACIT Vs Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 has clearly held that intimation u/s 143(1) is not assessment , so there is no question of treating the re-asses .....

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12-13, the question of change of opinion as contended by assessee does not arise. (iii) In the above context, attention is also drawn to the provisions 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 ha .....

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ers as well as the learned Standing Counsel for the respondents raised several contentions, we are of the considered view that one contention of the petitioners is sufficient for the disposal of all these writ petitions. Admittedly, the notices under Section 148 was issued on the sole ground that the total income admitted by each of these petitioners, constituted a very small percentage of their gross receipts for the relevant assessment year and that therefore there was income that escaped asse .....

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s to how the income returned by such assessee was at a consistently higher rate of the total receipts, the petitioners could have been in a position to point out how the admitted total income in their cases fell for short. Without making an actual comparison with named assessees in the same line of business, the Assessing Officers cannot leave it to presumptions and surmises. 10. The learned Standing Counsel for the respondents/ Department took us through various decisions of the Tribunal where .....

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elves to the estimation of income at 5% of either the gross receipts or the stock available on trade. 11. Under Section 147(1), the Assessing Officer is entitled to reopen assessment, if he has reason to believe that any income chargeable to tax has escaped assessment for the assessment year. Two conditions ought to be satisfied for the invocation of the power under Section 147. They are: (1) the existence of a reason to believe and (2) the escapement of any income chargeable to tax from assessm .....

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