TMI Blog2022 (1) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the question of taxing the deemed rental income does not arise. Revenue has not placed any material on record to demonstrate that the submission of the assessee of it not being the owner of the aforesaid properties is false/ incorrect. In the present case the AO prima facie has not done the bare necessary enquiry into the material received before he concluded that income chargeable to tax has escaped assessment. As in case ANKITA A. CHOKSEY VERSUS INCOME TAX OFFICER-19 (1) (1) OTHERS [ 2019 (1) TMI 862 - BOMBAY HIGH COURT] reasons to believe that income chargeable to tax has escaped Assessment must be on correct facts. If the facts, as recorded in the reasons are not correct and the assessee points out the same in its objections, then the order on objection must deal with it and prima facie, establish that the facts stated by it in its reasons as recorded are correct. Verification of source of commodity transactions and its income - As per the reasons recorded, the AO wants to verify it. In view of the settled position of law that for a mere verification of the claim, the power of reopening of assessment cannot be exercised - As decided in INDUCTOTHERM (INDIA) PVT. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) who vide order dated 28.06.2019 in Appeal No.230/18-19 granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds: 1) The order passed by AO and confirmed by CIT[A] are bad in law and against the facts of the case. 2) The reopening by AO and further assessment was not in line with apex court , therefore, assessment be annulled. 3) The addition by AO and confirmation by CIT[A] are incorrect and against the provision of section 22/23(1)(a) which is without any basis or cogent evidence, therefore addition of ₹ 400000/- and ₹ 1440000/- sustained ,deserves to be deleted. 4) The averments made in order by AO and sustained by CIT[A] are against the principles of natural justice ,against the law of evidence completely arbitrary based on whims and fancies, without following the due procedure of law and without proper notice. 4. At the outset, Ld AR submitted that vide Ground No.1 2, Assessee is challenging the assumption of jurisdiction u/s 148 of the Act and vide Ground No. 3, assessee is challenging the addition on merits. 5. With respect to challenging the assump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that even during the assessment proceedings, the AO could not bring any evidence to demonstrate that the aforesaid properties were owned by the Assessee. 7. He thereafter submitted that the reasons recorded by the AO for reopening the assessments cannot be said to be valid reasons as they were no wrong facts as the addition with respect to the deemed rental income made for two shops in the Mall at Ludhiana was not owned by the Assessee but was owned by the firm, S. K. Interiors, in which the assessee was one of the partner. With respect to the addition in respect of the property at Rohini, Delhi, he submitted that the aforesaid property was not owned by the assessee but was owned by his wife, Mrs. Vinod Kohli and further, the said property was sold by her on 31st March 2008, i.e. prior to the relevant assessment year. He therefore submitted that the AO did not have the jurisdiction under Section 147/148 to reopen the proceedings based on incorrect facts. 8. The Ld. AR thereafter pointed to the second page of the reasons and pointed to the reasons recorded about the alleged commodity transactions amounting to ₹ 125.91 lacs. He pointed to the reason wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the aforesaid property was jointly owned by the assessee with his wife, Vinod Kohli and during the relevant assessment year, it could not be let out and had remained vacant. He submitted that it could be let out for ₹ 21,000/- in F.Y. 2013-14. He submitted that the aforesaid submissions were made before the AO and CIT(A), but the same were ignored by them and addition was made. In support of his aforesaid contentions, he pointed to the relevant papers placed in the paper book. 12. Ld. AR therefore submitted that the reassessment being without jurisdiction, the same be set aside. 13. Ld. DR on the other hand supported the order of lower authorities and submitted that the AO had not challenged the validity of reopening before the lower authorities. 14. I have heard the rival submissions and perused the material on record. The assessee is challenging the assumption of jurisdiction for reopening the assessment u/s 147/148 of Act and also challenging on merits the addition made. The law on reopening of an assessment under the Act, is fairly settled. The Assessing Officer (AO) can re-open an assessment only in accordance with the express provisions provided in Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... listed in the reasons recorded out of which from the 4 properties (namely, property at Rajapur Residency, Dehradun, 2 properties at Rohini Delhi and two shops in Mall in Ludhiana) no deemed rental income has been declared by the assessee. The second allegation is that the assessee had entered into commodity transactions aggregating to ₹ 125.91 lacs and its source and income was required to be checked. 18. As far as the first allegation, namely not disclosing the deemed rental income from the 4 properties is concerned, I find that before me, Ld. AR has pointed out that the properties from which the AO wants to tax the deemed rental income does not belong to the assessee. 19. It is a settled position that even where an assessment has been only processed under Section 143(1) of the Act, the reopening notice must satisfy the test of having reason to believe that the income chargeable to tax has escaped assessment. The reason to believe has to be arrived at after applying one's mind to the material available and to reach a prima facie view that income chargeable to tax has escaped assessment. Mere receipt of information from any source would not by itself tantamount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. I find that the Hon ble Gujarat High Court in the case of Inductotherm (India) P. Ltd. Vs. M. Gopalan, reported in 2013 356 ITR 481 has observed that for a mere verification of the claim, the power of reopening of the assessment could not be exercised and it further observed that AO under the guise of power to re-open the assessment cannot seek to undertake an undertaking a fishing or roving inquiry or seek to verify the claim as if he is the scrutiny officer. 23. Considering the totality of the aforesaid facts and in view of the decision cited herein above, I am of the view that in the present case, notice for re-opening of the assessment u/s 147 of the Act is not as per the mandate of Sec.147 of the Act and therefore the re-opening is not permissible. I am therefore of the view that the notice issued for reopening has to be set aside and the same deserves to be quashed. 24. I therefore quash the impugned re-assessment proceedings for A.Y. 2011-12 and thus, set aside the same. Since I have hereinabove set aside the assessment framed u/s 143(3) r.w.s 147 of the Act and held it to be void and therefore, the issue on merits have been rendered academic and requires no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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