Re-opening of assessment to be based on concrete evidence

Income Tax Appellate Tribunal (ITAT): The Raipur Bench of ITAT while deciding on an appeal has held that where more than 4 years have elapsed since the original assessment year, then action under Section 147 of the Income Tax Act can be taken after the expiry of four years from the end of the relevant year only if the escapement of taxable income is due to a fault or non-disclosure on part of the assessee. Veracity of the notice under Section 148 of the Act has to be tested on the basis of the notice itself.

Mere belief by the Assessing Officer is not enough for the same to take place. For this, the Tribunal relied on the cases of  Haryana Acrylic Manufacturing Co. v. Commissioner of Income Tax, 2008 SCC OnLine Del 1500 and Dulichand Singhanaia v. Assistant Commissioner of Income-Tax, 2003 SCC OnLine P&H 1818. Where the Assessing Officer bases his reason for reopening on vague and scant information without independent application of mind, exercise of Section 147 is barred as held in CIT v. G&G Pharma,  (2015) 384 ITR 147.

Referring to the facts of the present case, the Bench observed that “it is now a settled position that in the absence of any incriminating material found at the time of search, no assessment under Section 153A of the of the Act can be framed and there exists no dispute in concluding that no incriminating material has been found in the present case.” The Tribunal further held that reopening of assessment under Section 153A must be made on the basis of concrete evidence and not mere suspicion by the assessing officer. Upholding the decision of Commissioner of Income Tax (Appeals), ITAT held that in the absence of any incriminating material found at the time of search, the assessment proceedings under Section 68 shall not be reopened under Section 153-A of the Act. [Asstt. Commissioner of Income Tax 1(2), Raipur v. Maruti Clean Coal & Power Ltd. Hira Arcade, ITA No. 98/Raipur/2012 & C.O. No. 01/Raipur/2016, decided on 07.03.2018]

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