Assessing Officer reopened the assessment of A.Y. 1997-98 on the basis of finding that the assessee had not paid tax on the income declared under VDIS, 97 and made the addition of income declared year-wise under VDIS as unexplained investment. It was held that the addition was not justified as the alleged investments were not made in the immediate preceding financial year to the assessment year under consideration.
A reading of VDIS declarations clearly show that no income pertaining to the impugned assessment year i.e. 1998-99 escaped assessment. While so, the Assessing Officer issued reopening notice for the impugned assessment year. It is well settled that there should be live link between the material gathered and that the income that is escaped assessment of that particular year. No reasonable person would come to a conclusion based on these evidences that income of the impugned assessment year has escaped taxation. If the law permits, the Assessing Officer should have issued a reopening notice for the respective assessment year in which the assessee had earned income and in which the assessee had made investments in fixed assets. Thus, on these facts, we have to also hold that the reopening in question is also bad in law.
INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH “E”, MUMBAI.
BEFORE SRI J.SUDHAKAR REDDY (AM) AND SRI RAJPAL YADAV (JM)
ITA No.324/Mum/07
[Assessment Year: 1998-99]
