S. 147 : Reassessment-Supply of reasons-Accommodation entries-Furnishing only the gist of the reasons instead of the complete recorded reasons vitiates the reassessment proceedings. Reassessment based solely on a statement which had already been retracted and whose retraction had been accepted by the appellate authority does not constitute a valid “reason to believe” that income had escaped assessment. [S. 143(3), 148]
The Assessing Officer reopened the assessment on the basis of the alleged admission of one of the directors that the assessee had earned commission by providing accommodation entries. However, only the gist of the recorded reasons was supplied to the assessee, not the complete reasons. The Tribunal held that failure to furnish the complete recorded reasons rendered the reopening invalid. The Bombay High Court affirmed the Tribunal’s order holding that the assessee was entitled to receive the entire recorded reasons and not merely their gist. The Court further observed that the very foundation of the reopening was the director’s statement, which had been retracted long before issuance of the notice under section 148, and such retraction had also been accepted by the appellate authority. In these circumstances, the Assessing Officer could not have formed a valid “reason to believe” that income had escaped assessment. Accordingly, no substantial question of law arose and the Revenue’s appeal was dismissed. (AY. 2004-05,) (ITXA No. 85 of 2020, dated 17-06-2026)
Pr. CIT v. Jas Trading Pvt. Ltd. (Bom.)(HC). www.itatonline.org
[Coram : Hon’ble Shri Justice B. P. Colabawalla & Hon’ble Shri Justice Firdosh P. Pooniwalla]