Reopening of assessment u/s 147

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This query is : Resolved

ravikanth (Querist)

06 January 2013 My client assessment was completed for the Asst Year 2008-09 and Asst Order was passed and demad taxes were also paid. In that scrutiny the assessee has declared u/s 44AF income of 15% of Gross Receipts on Rs 7.00 lakhs and Gross Receipts were assumed by the Assessing Officer is Rs 22.00 lakhs. The AO has passed orders by declaring income of 7% of Gross Receipts of Rs 22.00 lakhs and further deamand taxes paid. But in the Auditor's report shows that assess income of 15% of Gross Receipts Rs 22.00 lakhs. And now AO has issued a notice u/s 147 for reopening Assessment.
(i) Can the AO reopen u/s 147 on mere audit opinion (ii) reopening u/s 147 on mere audit report is valid or not.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

06 January 2013 In this case the AO has already exercised his opinion as regards to the turnover by enhancing it. While estimating the income also he has exercised his judicious approach
by lowering the rate to 7%.
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The findings of Audit Report can not be said to be concrete and properly evidencing any escapement of income. It is just the revision of the AO's opinion based on a rate which the assessee declared in a different circumstances. No new fact or cogent evidence is being brought to the record by Audit Report also.
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To my view, it is not valid for the AO to re-exercise his judgement on the basis of other's opinion.
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