TMI Blog2018 (11) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in the circumstances of the case, the Id CIT(A) is correct in law in holding that the reopening of assessment is bad in law without appreciating that at the stage of initiation of proceeding, all that required is the reason to believe and not an established f act of escapement of income? 2. Whether on the facts and in the circumstances of the case, the Id CIT(A) is justif ied in law in not appreciating the spirit of the decision of the Supreme Court in the case of ACIT Vs Rajesh Jhaveri Stock Brokers Pvt Ltd (2007) 291 ITR 500 wherein it was stated that the word reason in the phrase reason to believe would mean cause or justif ication to know or suppose that income had escaped assessment and the expression cannot mean that the AO should have f inally ascertained the f act, legal evidence or conclusion and the f inal outcome of the proceedings is not relevant? 3. Whether on the facts and in the circumstances of the case and in law, the Id CIT(A) is correct in holding that the reopening of assessment is bad in law without appreciating that no regular scrutiny u/s.143(3) was made in the case and theref ore the requirement to prove f ailure on the part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other sources, filed his return of income for the A.Y 2005-06 on 31.07.2005 declaring income of ₹ 40,63,020/-. The return was initially processed u/s 143(1) of the IT Act on 28.11.2005. 3. On 07.01.2009, Shri B. Ramalinga Raju, ex-chairman of M/s Satyam Computer Services Ltd., (M/s SCSL) in his letter sent to the Board of Directors with a copy marked to SEBI, has stated that the books of account of the company were forged for the last several years. Consequent thereto, the Investigation Agencies like the CBI, SFIO and Enforcement Directorate etc., conducted investigations and it came to light that Shri B. Ramalinga Raju and his brothers (assessee being one of them) and their family members have floated numerous front companies for the purpose of routing the funds and to acquire vast tracts of land in and around Hyderabad. Since the assessee is also a co-accused in the Satyam scam as per the charge sheet filed by CBI on 07.04.2009, the A.O issued a notice u/s 148 of the IT Act and in response to the notice, the assessee filed his return of income on 27.03.2012 declaring income of ₹ 40,63,020/-. The assessee also filed his objections for reopening the assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the issue at length and has held the reassessments to be invalid. Further, in the decisions relied upon by the Ld. Counsel for the assessee, the Hon ble High Courts have held that even for reopening an assessment u/s 143(1) of the IT Ac, the A.O has to have tangible material in his possession subsequent to the intimation u/s 143(1) of the I.T Act before recording reasons for reopening of the assessment. The Hon ble Delhi High Court in the case of orient Craft Ltd., (cited supra) has held as under: Held, dismissing he appeal, that the reasons disclosed that the A.O reached the belief that there was escapement of income on going through the return of income f iled by the assessee af ter he accepted the return under section 143(1) without scrutiny, and nothing more. This was nothing but a review of the earlier proceedings and an abuse of power by the A.O. the reasons recorded by the A.O did conf irm the apprehension about the harm that a less strict interpretation of the words reason to belief vis- -vis an intimation issued under section 143(1) could cause to the tax regime. There was nothing in the reasons recorded to show that any tangible material had come into the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue that proviso to section 143(2) of the Act prescribes a time limit within which such notice could be issued. It is equally well settled that such notice is mandatory and in absence of notice under section 143(2) of the Act within the time permitted, scrutiny assessment under section 143(3) cannot be framed. However, merely because no such notice was issued, to contend that the assessment cannot be reopened, is not backed by any statutory provisions. Counsel for the petitioner did not even stretch his contention to that extent. The case of the petitioner as we understand is that in guise of reopening of an assessment, the Assessing Off icer cannot try to scrutinize the return. This aspect substantially overlaps with the later contention of the petitioner that the reasons recorded by the Assessing Off icer were not germane and were not suff icient to permit reopening. It would, thus, emerge that even in case of reopening of an assessment which was previously accepted under section 143(1) of the Act without scrutiny, the Assessing Off icer would have power to reopen the assessment, provided he had some tangible material on the basis of which he could f orm a reason to believe t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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