TMI Blog2017 (7) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Dr. S. Muralidhar, J. 1.This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act ) is directed against the order dated 29th July, 2016 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 735/Del./2012 for the Assessment Year ( AY ) 2003-04. 2. While admitting the appeal on 15th February, 2017, the following question of law was framed by the Court for consideration: Did the ITAT and the CIT(A) fall into error in holding that the reassessment was not justified in law in the circumstances of the case? 3.The Assessee filed its return of income on 25th November, 2003 for AY 2003-04 declaring an income of ₹ 76,340. 4. On 31st March, 2010, the Assessing Officer ( AO ) served a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f above, I have reason to believe that an income of ₹ 95,65,510 has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Since, as per the available records the assessment was not made in this case u/s 143(3) or 147 of the Act and period of 4 years has elapsed, proposal is hereby submitted along with the relevant assessment records to the Addl. Commissioner of Income Tax, Range-9, New Delhi for consideration and necessary approval in accordance with the provisions of section 15l (2) of the IT Act, 1961 for issuance of notice u/s 148 of the 1.T. Act. 5. Annexure B to the reasons set out the details of the entries which were 19 in number totalling ₹ 95,65,510/-. 6. The objections raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. v. ITO Ward 14(3), New Delhi). As far as this decision is concerned, the limited question that was sought to be urged by the Assessee which was in appeal before this Court was whether the ITAT had fallen in error in upholding the addition of ₹ 1, 10,896 as income earned by way of commission for providing accommodation entries, when in fact this particular item did not feature as part of the reasons to believe recorded by the AO in that case in support of the notice issued under Section 147 of the Act. The Court had analysed the material placed on record and found that the total amount of alleged accommodation entries worked out to ₹ 55,44,816 and in that regard the Assessee s explanation was somewhat accepted . It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore not work out to ₹ 95,65,510. On the face of it, therefore, there is a non-application of mind by the AO. What is further unacceptable is that the AO persisted with his belief that the said amount had escaped assessment not only at the stage of rejecting the Assessee s objections but also in the re-assessment proceedings where he proceeded to add the entire amount to the returned income of the Assessee. This is a classic case of non-application of mind by the AO. 12. In a recent decision in Principal Commissioner of Income Tax-6 v. Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Delhi), this Court observed as under: 22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act. 13. In view of the said decision, the Court has no hesitation in concluding in the present case that the reasons recorded by the AO for reopening the assessment under Section 147 of the Act do not meet the requirement of the law. The ITAT was, therefore, perfectly justified in confirming the order of the CIT (A) and holding the reopening of the assessment to be bad in law. 14. The question framed is, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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