Reopening of assessment based on wrong and irrelevant facts is unsustainable-in-law

Evershine Recreation Private Limited Vs DCIT (ITAT Chandigarh)

ITAT Chandigarh held that reopening of assessment under section 147 of the Income Tax Act based on wrong and irrelevant facts recorded under the reasons recorded for the formation of belief of escapement of income chargeable to income tax is unsustainable in law and liable to be quashed.

Facts- Vide the present appeal, the appellant contested that CIT(A) has gone wrong in upholding the Assessing Officer’s action whereby he issued notice u/s. 148 of the Income Tax Act, 1961 by merely relying on third party information without application of mind and without first verifying the facts from the record.

Further, CIT(A) has wrongly upheld the reassessment which was bad in law, being made without following the principles of natural justice, equity and fair play.

The appellant also contended that the initiation of re­opening proceedings was wrongly upheld, since such initiation was based on information contained in the search material found during the search of a third party, which is contrary to the non-obstante clause contained in Sections 153A/153C of the Income Tax Act.

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