Reopening of assessment u/s. 148 based on reason to suspect is unsustainable-in-law: ITAT Delhi

ITAT Delhi held that reopening of assessment under section 148 of the Income Tax Act based on reason to suspect unsustainable as AO failed to demonstrate live link between tangible material and formation of reason to believe that income had escaped assessment.

Facts- Vide the present appeal, the appellant mainly challenges the reopening of assessment under section 148 of the Act. Assessee alleges that the assessment was proposed to reopen on the ground that no return of income has been filed by the assessee for the year under consideration when in fact the assessee had filed return of income on 31.03.2010. further, the assessment was reopened based on an information received from DDIT stating that assessee has invested more than 15 crores in construction of house. However, the reason doesn’t specify in which property the assessee has invested the amount.

Conclusion- Held the reasons recorded in the present case at best can be treated to be a reason to suspect which is not sufficient for reopening the assessment u/s 148 of the Act. The requirement of application of mind is missing the present case, there is no independent application of mind by the AO to tangible materials and reasons and the AO failed to demonstrate live link between tangible material and formation of reason to believe that income had escaped assessment.

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