· Assessee filed its return of income for A.Y. 2008-09 on 30.09.2008. The case of assessee company was selected for scrutiny u/s 143(3) of the Act.
· A detailed questionnaire was issued during the said proceedings asking for details in respect of share application money received during the year. Assessee duly submitted the said details along with addresses, assessment particulars, confirmations and complete financial statements of the share applicant companies. The assessment was completed u/s 143(3) of the Act without making any addition in respect of the share application money received during the year.
· Thereafter, on 20.03.2015, notice u/s 148 was issued to the assessee, after recording the reasons for reopening the assessment.
· The Court observed the fact that the reasons recorded contained the names of the same parties which were initially disclosed by the assessee during the assessment proceedings u/s 143(3). The Court further observed that there was no new material which was found or mentioned in the reasons to believe which were not available at the time of original assessment u/s 143(3).
· The Court also considered the fact that neither the AO made any enquiry or investigation, nor any effort to establish any connection between the statement recorded by Investigation Wing and the companies from which assessee had received share application money. The AO merely relied upon the report of Investigation Wing.
· The Court further took note of the fact that the reasons recorded did not disclose as to what fact or information was not disclosed by the assessee. The Court further held that an allegation that the companies are paper companies, without any further facts, is by itself insufficient to reopen assessments that stand closed after passing an order u/s 143(3).
· In view of the above facts, the Court concluded that the assessee cannot be said to have failed to disclose fully and truly all material facts, and thus, the assumption of jurisdiction u/s 147 of the Act was erroneous.
· The Court further laid down the following guidelines for the Revenue in matters of reopening of assessments:
(a) The reasons should be communicated to the assessee along with the copy of standard form used by AO for obtaining the approval of Superior Officer.
(b) The reasons to believe should spell out the reasons and grounds available with the AO for reopening the assessment, especially in the cases where first proviso to section 147 is applicable.
(c) The reasons should also analyze and clarify the investigation report, if the reasons recorded are based on any investigation report.
(d) Where the reasons refer to any other document, such document should be enclosed with the reasons recorded.
(e) The order disposing off the objections should deal with each objection of the assessee, and give proper reasons for the conclusion drawn.
For further reading, refer the attachment.
Further Reading