DCIT Vs CDS Infra Projects Ltd (ITAT Delhi)
ITAT Delhi held that reopening of assessment under section 147 of the Income Tax Act, solely on the basis of information received, without application of mind is bad-in-law and liable to be quashed. Accordingly, appeal of revenue dismissed.
Facts- The appeal filed by the Revenue and Cross-Objections filed by the assessee are against order dated 08.03.2023 of Learned Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre (NFAC), Delhi under Section 250 of the Income Tax Act, 1961 arising out of Order dated 05.12.2019 of the Learned Assessing Officer/Assistant Commissioner of Income Tax, Circle 5(2), New Delhi under Sections 143(3) read with section 147 of the Act for assessment year 2012-13.
Conclusion- Reopening of assessment proceedings u/s 147 is without application of mind, solely on the basis of information received is bad in law & liable to quashed. It is a settled principle that the information received from the other Income Tax Officer cannot be said to tangible material per se without any further enquiry being undertaken by the AO to establish the link between the tangible material and formation of reason to believe that income had escaped assessment.
Approval under section 151 of the Act is mechanical-Notice issued u/s. 148 without obtaining prior valid approval u/s. 151 of the Act will be considered as invalid and liable to be quashed. In the present case, the PCIT has stated, “I am satisfied that this is a fit case for issue of notice u/s 148 of I.T. Act 1961”. This response is mechanical in nature, showing that the approval was given without understanding the nature of the information or the basis for believing the income is taxable and even not clarified how he was satisfied that the case qualifies for action u/s 147.
