September 2010
Reassessment : S. 147 and S. 148 of Income-tax Act, 1961 : A.Y. 1998-99 : AO issuing notice u/s.148 on basis of information given by Dy. Director and directions from Dy. Director and Addl Commissioner : AO not applying his mind : Notice and reassessment p
By K. B. Bhujle | Advocate
New Page 2
Reported :
50 Reassessment : S. 147 and
S. 148 of Income-tax Act, 1961 : A.Y. 1998-99 : AO issuing notice u/s.148 on
basis of information given by Dy. Director and directions from Dy. Director and
Addl Commissioner : AO not applying his mind : Notice and reassessment
proceedings not valid.
[CIT v. SFIL Stock
Broking Ltd., 325 ITR 2852 (Del.)]
For the A.Y. 1998-99, the
return of income filed by the assessee was processed u/s.143(1) of the
Income-tax Act, 1961. Subsequently, on the basis of the information given by the
DDIT (Investigation) that the assessee was allegedly the beneficiary of a bogus
claim of long-term capital gain, the Assessing Officer issued notice u/s.148 of
the Act and made an addition of Rs.20,70,000 in the reassessment proceedings.
The Tribunal quashed the reassessment proceedings holding it to be illegal.
The Delhi High Court upheld
the decision of the Tribunal and held as under :
“(i) The first sentence
of the reasons recorded by the Assessing Officer was mere information
received from the DDIT (Investigation). The second sentence was a direction
given by the same Deputy Director to issue a notice u/s.148. The third
sentence again comprised a direction given by the Additional Commissioner to
initiate proceedings u/s.148 in respect of cases pertaining to the relevant
ward.
(ii) The Assessing
Officer referred to the information and the two directions as reasons on the
basis of which he was proceeding to issue notice u/s.148.
(iii) These could not be
the reasons for proceeding u/s.147/148 of the Act. As the first part was
only an information and the second and the third parts of the reasons were
mere directions, it was not at all discernible as to whether the Assessing
Officer had applied his mind to the information and independently arrived at
a belief that, on the basis of the material which he had before him, income
had escaped assessment.
(iv) There was no
substantial question of law for consideration.”
