TMI Blog2016 (5) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... his is an appeal filed by the assessee challenging correctness of order dated 13.01.2016 passed by the ld. CIT(A) in the matter of assessment under section 143(3) read with section 147 of the Income Tax Act, 1961 ( the Act for short), for the assessment year 2007-08. 2. In the first ground of appeal, the assessee has raised the following grievance :- On the facts and circumstance of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s.147 by issuing notice u/s. 148 of the I.T. Act, 1961. 3. It is a case of reopening the assessment on 29.03.2014. The Assessing Officer reopened the assessment by recordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied that the case of the assessee is a fit case for action U/S 147 of the I.T. Act and issue of notice u/s. 148 of the I.T. Act for Assessment Year 2007-08. 4. The assessee did object against the reopening so proposed by the Assessing Officer and filed his detailed submission before the Assessing Officer. Assessing Officer, however, brushed aside these objections by observing rather cryptically that the objection so raised by the assessee has been perused and found unreasonable . Aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) but again without any success. Ld. CIT(A) also dismissed the grievance of the assessee, against reopening of the assessment and observed as follows :- 6. The main contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the reassessment proceedings initiated in this case are bad in law and void ab initio and the same are liable to be quashed. 6.1 The contentions, arguments and case laws have been duly considered in the light of the facts of the case. The Id. AR of the assessee has misinterpreted the entire provisions relating to the reopening. At the time of reopening of the assessment, the AO only required to see whether there is prima facie material/information to arrive at a reasonable conclusion that there was escapement of income. Sufficiency of the reason is not open to question in a court of law but the existence of belief can be challenged. Courts can examine whether the reasons are relevant and have a bearing on the matters with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above discussion, I uphold the reopening of the assessment as valid and in accordance with the law. Hence, the ground of appeal is dismissed. 5. The assessee is still not satisfied and is in further appeal before us. A plain reading of the reasons for reopening the assessment reproduced before us shows that there is nothing more than suspicion at the foundation of the reopening. The Assessing Officer himself has stated that capital gain should have been offered for financial year 2006-07 relevant to assessment year 2007-08, which may not have been offered in the return of income . Essentially what the Assessing Officer, therefore, wanted was a verification of whether or not the amount has been offered in the return of income but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if established to be correct, will have a cause and effect relationship with the income escaping the assessment. The latter category consists of the facts, which, if established to be correct, could legitimately lead to further enquiries which may lead to detection of an income which has escaped assessment. But then these categories of reasons do not permit reopening of completed assessments. While dealing with this aspect of the matter, it is useful to bear in mind observation made by Hon ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das [(1976) 103 ITR 437]. Reasons for the formation of belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Reasons provide link between conclusion and the evidence . . 7. In view of these discussions and bearing in mind entirety of the case, we deem it fit and proper to quash the reassessment proceedings. Ground no.1 is thus allowed. 8. When the reassessment proceedings stand quashed, we see no need to refer to ground no.2 of appeal of the assessee which calls into question correctness of the ld. CIT(A) s sustaining addition of ₹ 8,10,090/- on account of undisclosed long term capital gain, on merits. That aspect of the matter, in view of reopening proceedings having been quashed, rendered infructuous. Thus, ground no.2 of assessee is dismissed as infructuous. 9. In the result, appeal is partly allowed in the terms indicated as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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