Case Law Details
Brief of the Case
ITAT Chandigarh held In the case of M/s Amit Engineers vs. ACIT that it is a trite law that the only condition for the Assessing Officer to reopen the case is that for whatever reasons he has ‘reason to believe’ that income has escaped assessment. The phrase “reason to believe” has been defined in the Landmark judgment of the Hon’ble Apex Court in the case of Sheo Nath Singh Vs. ACIT (1971) 82 ITR 147 in which it was held that “The words “reason to believe” suggest that the belief must be of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour.” There can be no dispute that the main ingredients for initiating reassessment proceedings are presence of material and live link between the material and the belief formed by the Assessing Officer, which makes the ‘reasonable belief’. Hence, reopening of assessment not valid in absence of any tangible material showing escaped income.
Facts of the Case
The assessee firm is having manufacturing unit located at Baddi and is engaged in manufacturing of rail coach components and railway electronic components. The firm’s branch in Mohali is trading in rail coach components and servicing of railway air conditioners to the Indian Railways. The assessee filed its return of income for assessment year 2011-12 on 30.9.2011 declaring income of Rs.5,00,130/- after claiming deduction under section 80IC amounting to Rs.4,04,27,570/- .The intimation under section 143(1) was issued to the assessee as on 23.7.2012.Thereafter, the Assessing Officer issued a notice under section 148 dated 14-6-2013 to reopen the case.
The Assessing Officer noticed that for the current assessment year i.e. 2011-12 being 6th year of the assessee’s business activities, it was eligible to get deduction under section 80IC of the Act @ 25% instead of 100% as claimed by the assessee. The assessee made detailed submissions before the Assessing Officer contending that since it has done substantial expansion during the year, it is eligible for deduction under section 80IC @ 100% even in this year. The addition of Rs.3,08,20,803/- was made as income of the assessee. The assessee went in appeal before the CIT (A), whereby it made submissions on the merits of the case. In addition to this, the assessee also challenged the initiation of proceedings under section 148. It was submitted that reassessment proceedings were not valid as no new material had come in possession of the Assessing Officer for reopening the case.
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