Reopening Assessment doubting certain information filed in return is invalid for want of fresh tangible material

Brief of the case:

The ITAT Ahmedabad in the case of Parul Bhupendra Patel vs. ITO held that reopening of the assessment on the basis of doubting certain information filed in the return of income and reopening assessment on that basis is not valid in law as AO had not obtained any new tangible material to believe that income had escaped assessment.

Facts of the case:

• Assessee individual having income from tuitions and other sources filed her return of income for A.Y. 08-09 on 21.03.2007 declaring total income of Rs. 1,44,954/-. The return of income was initially processed u/s. 143(1) of the Act. Subsequently notice u/s. 148 of the Act was issued on 30th March, 2013 and the case was reopened and thereafter the assessment was framed u/s. 143(3) read with section. 147 where the total income was assessed at Rs. 3,44,950/-.
• CIT (A) also dismissed the appeal of assessee. Aggrieved by that, assessee is now in appeal before tribunal.
  

Contention of the Assessee:

The reopening has been made on the basis of material which was already available on record of A.O and was not based on any new tangible material obtained by AO. The learned counsel for the assessee relied on the decision of Hon’ble Apex Court in the case of CIT vs. Kelvinator India Ltd. 320 ITR 561 and submitted that reason to believe does not give arbitrary powers to reopen an assessment and that change of opinion cannot be reason to believe that income chargeable to tax has escaped assessment.

Contention of the Revenue:

• The reopening was not based on any change in opinion as AO had no opportunity to examine the books of account because the return of the AO was processed under sec 143(1) by the system which checks the return only on limited criterias.
• The AO noted some unusual items in return filed by the assessee and believed that income had escaped assessment. Therefore, the reassessment proceedings are valid in law.
  

Held by ITAT Ahmedabad:

• As per Sec 147 for reopening assessment u/s 148 A.O must have reason to believe that income chargeable to tax for the assessment year concerned has escaped assessment and such reason to believe must be based upon some tangible material coming in the hands of AO.

• In the present case, the AO had reopened the assessment on the basis of information furnished by assessee in her return of income relating to land purchased by her. AO prima facie had no material in the hands that the land was purchased from any unaccounted/undisclosed money.
• Therefore, merely opening an assessment to check the case from end to end is not permissible as sec 147 require the AO to have some tangible material in hand providing him a good reason to believe that income had escaped assessment.