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Facts
The assessee filed an appeal against the order dated 19.04.2024 by the CIT(A) for Assessment Year 2011-2012. The appeal concerned the reopening of assessment initiated based on information received from the Income Tax Officer (Investigation) regarding tax evasion through various beneficiaries. The assessee's PAN is AALCS0017R.
Held
The Tribunal held that the reopening of assessment was invalid. It was found that there was no independent application of mind by the Assessing Officer (AO) and no clear live link connecting the information received to the assessee. The AO relied solely on a report without independent verification.
Key Issues
Whether the reopening of assessment under section 147 r.w.s. 148 of the IT Act was valid without independent application of mind by the AO and a live link between the information and the assessee.
Sections Cited
147, 148
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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI GEORGE MATHAN
आदेश / O R D E R This is an appeal filed by the assessee against the order dated 19.04.2024, passed by the ld.CIT(A), National Faceless Appeal Centre, Delhi for the assessment year 2011-2012. 2. It was submitted by the Ld.AR that the issue is in the appeal was against the reopening of the assessment. The Ld. AR drew my attention to reasons recorded copy of which is filed at page 1 of the paper book which reads as follows:-
It was submission that the reasons recorded just mentions about the information having been received from the Income Tax Officer Unit-1 & AIU, Kolkata regarding matter of tax evasion to various through various beneficiaries. It was the submission that there is no independent application of mind by the AO nor is there live link connecting the assessee to the said information. It was submission that in view of the decision of Hon’ble Jurisdictional High Court Calcutta in the case of Boothnath Vintrade Private Limited, in ITAT/297/2024 and IA No.GA/1/2024 dated 14/11/2025, wherein the Hon’ble Jurisdictional High Court has held in para 5.2 to 6 as follows:- 5.2. It is settled that before an AO can be said to have had reasons to believe that some income has escaped assessment, he should have relevant material before him from which he could have drawn such conclusion. His vague imagination that there might have been some escapement of income from assessment is not sufficient [CHHUGANMAL RAJPAL VS. S. P. CHALIHA (1971) 79 ITR 603 (SC)]. It is emphatically settled in this regard that there can be no doubt that the words "reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Assessing Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Ld. AO would be acting without jurisdiction, if the reason for the belief that the conditions required to be satisfied do not exist or is not material or relevant to the belief required by the section [SHEO NATH SINGH VS. AAC. (1971) 82 ITR 147 (SC). In the case of PCIT Vs. Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Del.) wherein it has been held as under: "where reassessment was resorted to on basis of information from DIT (Investigation) that assessee had received accommodation entry but and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified." 5.3. Ld. AO simply based his belief on the alleged report supplied by the DCIT, (Investigation), Kolkata for assuming jurisdiction u/s. 148 of the Act without adducing on record any evidence in support thereof and without any independent application of mind on the issue. It is an inalienable principle of law that the reasons recorded u/s. 148 of the Act should be based on credible material which must have a live link or nexus with the belief that there was escapement of income. There should be an independent application of mind on such material before recording the reasons and issuing notice u/s. 148 of the Act. The belief should be held in good faith and objectively; it cannot be a mere pretence, 6.Considering the facts on record and the contents of the reasons to believe recorded by the Ld. AO coupled with his general and casual observations without the conduct of any examination or verification as well as judicial precedents referred above, we hold that the crucial link between the information made available to the AO and the formation of belief is absent. There is no independent application of mind by the AO. Accordingly, the initiation of proceedings u/s. 147 r.w.s. 148 to reopen the assessment does not satisfy the requirements of the law. Ground no. 4 of appeal is on the legal issue is allowed. Since no submissions have been made by both the parties on the merits of the case and the legal issue is allowed in favour of the assessee and remaining grounds are rendered academic in nature, hence, not adjudicated upon.
It was submission that the reassessment proceeding is liable to be quashed.
In reply, the Ld.Sr DR vehemently supported the order of the AO and CIT(A).
I have Considered the rival submissions. Admittedly, as it is noticed that there is no independent enquiry in regard to the information received by the AO from the ITO (Investigation Wing) and as no clear live link has been shown between the said information on the assessee, respectfully following the decision of the Hon’ble Jurisdictional High Court Calcutta in the case of Boothnath Vintrade Private Limited, referred to supra, the reopening of the assessment is held to be invalid and consequently the same is quashed. The consequential assessment order also stands quashed.