SIMCORP FUND LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE- 4(3), MUMBAI, MUMBAI

Facts in brief are that the return of income was filed by the assessee on 31st October, 2005 declaring total income of Rs. 1,23,63,328/-. Thereafter, the assessment was completed u/s 143(3) of the Act on 24.12.2007 at an assessed income of Rs. 1,24,22,210/-. Thereafter, the AO has issued the impugned notice u/s 148 of the Act dated 18.03.2010 and thereafter re-opened the assessment of the assessee and framed the assessment u/s 144 of the Act on 10.12.2010, wherein he made an addition of Rs. 40 lakhs u/s 68 of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to dismiss the same. Aggrieved the assessee is before us.

We have heard both the parties and perused the records. Since the assessee has challenged the juri iction of AO to have reopened the assessment, we need to examine the ‘reasons recorded' by AO need to be examined to see whether he had satisfied the conditions precedent necessary for doing so, as prescribed u/s Section 147 of the Act i.e. Firstly whether AO has recorded the reasons before reopening the assessment. And if so, whether the reasons recorded fulfil the requirement of law or not. The fundamental requirement of law as stipulated u/s 147 of the Act is that before reopening an assessment, AO has to record the reasons wherein he has to spell out the “Reasons to believe, escapement of income". It is well settled that “Reasons to believe