Vanita Sanjeev Anad Vs ITO (Delhi High Court)
In the given case, the Petitioner who is a regular income tax assessee filed her return of income for the AY 2011-12. The Assessing Officer issued under section 133(6) of the Act, called for certain information from the assessee. The same was provided by the Petitioner at the time of hearing. Subsequently, AO issued a notice under section 148 of the Act, which is impugned in the present petition. In response thereto, Petitioner filed her return of income and pursuant to a request for supply of ‘reasons to believe’, the AO furnished the same. Assessee has filed objections to the said reasons.
Reasons for reopening of the assessment in case of Ms. Vanita S Anand is that the transactions with M/s. Duggal Associates are appearing in the bank account of major amount. Ms. Vanita S. Anand submitted that she was received short term loan from Shri Anil Duggal proprietor of M/s. Duggal Associates and which was returned back. Enquiries were conducted with Shri Anil Duggal in respect of above mentioned transactions, in response to queries, Shri Anil Duggal filed a reply confirming that he has given loan to Ms. Vanita S. Anand and the same has been including as loan and advances in his books of account.
The approach of the AO is fundamentally flawed, as he has assumed that just because certain loan amount is outstanding, the same was liable to be added to the income of the petitioner-assessee. Thus, applying the test of prima facie evaluation of reasons for determining whether the commencement of reassessment proceedings is valid or not, we have no hesitation to say that there is nothing on record to justify the reopening. We are also not impressed by the contention of the Revenue that reopening of assessment is justified and necessary as there are discrepancies in the return originally filed, and the return filed in response to the notice under section 148 of the Act by the assessee. At this stage we are only concerned with the fact whether the reasons as recorded by the AO showcase due application of mind. The reasoning does not indicate the basis for coming to the conclusion that the petitioner’s taxable income has escaped assessment and the reasons formulated by the AO are based on a fundamentally flawed approach. We do not find any such material or basis to justify the reopening of the assessment. Resultantly, the writ petition is allowed. The notice under section 148 of the Act and the proceedings emanating therefrom are hereby quashed. Parties are left to bear their respective costs.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. The present petition under Article 226 of the Constitution of India seeks quashing of the notice under section 148 of the Income-Tax Act (hereinafter referred to as “the Act”) dated 29-3-2018 for reopening of the assessment in respect of Assessment Year (hereinafter referred to as “AY”) 2011-12.
2. The brief facts leading to the filing of present petition, are that the Petitioner who is a regular income tax assessee filed her return of income for the AY 2011-12 on 15-7-2011. The Assessing Officer (hereinafter referred to as “AO”) vide letter dated 22-3-2018 issued under section 133(6) of the Act, called for certain information from the assessee. The same was provided by the Petitioner on 28-3-2018, at the time of hearing. Subsequently, Respondent issued a notice dated 29-3-2018 under section 148 of the Act, which is impugned in the present petition. In response thereto, Petitioner filed her return of income on 30-4-2018 and pursuant to a request for supply of ‘reasons to believe’, the AO furnished the same on 10-7-2018. Assessee’s objections to the said reasons, filed on 10-9-2018, came to be disposed of vide order dated 08-10-2018.
3. Since the scope of challenge in the instant petition pertains to the assumption of jurisdiction by the AO under section 147 of the Act, perusal of the reasons to believe is necessary. The same are extracted herein below:
‘Reasons for reopening of the assessment in case of Ms. Vanita S Anand Asstt. Year 2011-12 U/s. 147 of the I.T. Act 1961
1. The ITO (Inv.) Unit-7/2/2017-18/419 dated 09/03/2018 forwards the information that following transactions with M/s. Duggal Associates are appearing in the bank account NO. 002901528361 of Ms. Vanita S. Anand maintained with ICICI Bank, Greater Kailash Branch, New Delhi:
