Case Law Details
Global Arkitekts P. Ltd. Vs ITO (ITAT Chennai)
ITAT Chennai held that AO having chosen not to scrutinize the return cannot resort to the provisions of section 147 of the Income Tax Act in absence of any new or fresh material indicating escapement of income.
Facts- The assessee mainly contended that the notice issued u/s. 148 is without any basis and without any reasonable belief. The reopening has been resorted to based on information already available in the return of income and therefore, reopening beyond 4 years is not permissible in terms of various judicial pronouncements.
Conclusion- The Hon’ble Court held that AO has power to reopen provided there is “tangible material” to come to the conclusion that there is escapement of income. There can be no review of an assessment in the guise of reopening and that a bare review without any tangible material would amount to abuse of the power.
In this case, the Ld. AO reached the belief of escapement of income on going through the return of income filed by the assessee after the return was accepted u/s 143(1). The Hon’ble Court held that it was nothing but a review of the earlier proceedings and an abuse of power by AO. The less strict interpretation of the words “reason to believe” vis-à-vis an intimation issued u/s 143(1) cannot be permitted. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the AO subsequent to the issue of the intimation which reflects an arbitrary exercise of the power conferred under section 147.
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