Power to reopen the case cannot be exercised on the basis of "reason to suspect" or to "scrutinize" the return or "verify" the accounts/claims

The Income Tax Appellate Tribunal has ruled that tax authorities cannot reopen a case solely based on a 'reason to suspect', a desire to 'scrutinise' returns, or to 'verify' accounts. The judgement clarifies that such grounds are insufficient for initiating reassessment proceedings under Section 147 of the Income Tax Act. This decision highlights the need for more substantial justification before a completed assessment can be challenged.

IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD ‘B’ BENCH : Hyderabad
(Through Video Conference)

Before Shri S.S. GODARA, Judicial Member
and
Shri L.P. SAHU, Accountant Member

ITA Nos. 525 & 526/Hyd./2019
Assessment Years: 2007-08 and 2008-09

Dy.CIT, Circle 8(1) 
Hyderabad 

vs. 

Smt. Meda Vani
Hyderabad
[PAN: AGDPJ1365N]
 (Appellant) 
&
Cross Objection Nos. 20 & 21/Hyd/19
 (In ITA Nos. 525 & 526/Hyd./2019)
 Assessment Years: 2007-08 and 2008-09

Smt. Meda Vani
Hyderabad
 vs. 

Dy.CIT, Circle 8(1)
 Hyderabad
(Respondent)

 For Revenue: Sri R. Mujumdar, DR
 For Assessee : Sh. A.V. Raghuram, Adv.

 Date of Hearing : 07/04/2021 (for ITA 525/H/19 along with  C.O. 20/H/19)  08/04/2021 (for ITA 526/H/19 along with  C.O. 21/H/19)
 Date of Pronouncement : 18/06/2021

O R D E R

PER S.S. GODARA, J.M.

These two revenue’s appeals ITA 525/H/19, ITA 526/Hyd/19 and assessee’s Cross Objection Nos. 20 & 21/H/19 therein for AY 2007-08 and 2008-09 arise against the CIT(A)-10, Hyderabad’s separate orders dated  11.01.2019 and 10.01.2019 passed in case nos. 0114/2015-16 and 0113/2015-16; respectively involving proceedings u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (in short ‘the Act’). 

Heard both the parties. Case file perused.

2. We advert to Revenue’s appeal ITA 525/Hyd/19 seeking to reverse the CIT(A)’s lower appellate findings quashing sec.148/147(vii) being hit by sec.147 first proviso.

Both the learned Representatives took us to the CIT(A)’s detailed discussion to this effect reading as under:

“4.1 The present appeal is against the reassessment order dt.27.03.2014. Prior to the reassessment order u/s 143(3) r.w.s. 147 dt. 27.03.2014, assessment order u/s. 143(3) dt. 11.11.2009 was passed in the case of the appellant, for A.Y. 2007-08. Vide letter dt. 19.09.2016 of this office, the AO was requested to forward the assessment record in respect of the proceedings u/ s. 143(3) completed- vide order dt. 11.11.2009. Reminders dt. 24.02.2017, 27.02.2017 and 03.03.2017 were issued requiring the said record. A final reminder dt. 13.03.2018 was also issued. Till date, the assessment record is not received. However, as part of the written submissions (paper book), the appellant. furnished copies of the correspondence relating to the proceedings u/s. 143(3) completed vide order dt. 11.11.2009. As mentioned earlier, the paper book of the appellant was forwarded to the AO, for comments.

5. The grounds of appeal nos. 2 to 5 relate to the contention that the reassessment proceedings u/s. 147 are not valid in law.

6. In the course of the appeal proceedings, the appellant furnished written submissions dt 30.12.2015 and the relevant portion of the same is reproduced, as below.

To know more in details find the attachment file