ITO Vs Magnetic Properties Exim Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai held that in case of reopening of assessment AO needs to have exact nature of income which is alleged to have escaped assessment. In absence of the same, reopening of assessment is bad in law and liable to be quashed.
Facts- The Revenue has filed this appeal challenging the order dated 02-06-2023 passed by the CIT(A)-NFAC, Delhi and it relates to the Assessment Year (AY.) 2011-12. The Revenue is aggrieved by the decision of CIT(A) in deleting the addition made by the AO u/s 68 of the Income Tax Act, 1961.
Conclusion- Held that the AO has reopened the assessment without knowledge of exact nature of income alleged to have escaped the assessment at the time of recording reasons as well as at the time of completion of assessment. As noticed earlier, the provisions of sec. 147 of the Act makes it mandatory that the AO should be clear about the alleged escapement of income while recording reasons for reopening of assessment. Hence, the reopening has to be invalid on these reasons. Accordingly, we are of the view that the reopening of the assessment is bad in law and accordingly, the addition made by the AO cannot be sustained.
