I.T.A. No. 1622/DEL/2020

Assessment Year: 2009-2010

Decided On: 06.10.2023

Appellants: Aruna Garg Vs. Respondent: ACIT, Circle-I

Hon'ble Judges/Coram:
Challa Nagendra Prasad, Member (J) and Pradip Kumar Kedia


Pradip Kumar Kedia, Member (A)

1. The captioned appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), Ghaziabad ('CIT(A)' in short) dated 03.08.2020 arising from the assessment order dated 28.10.2016 passed by the Assessing Officer (AO) under Section 143(3) r.w. Section 147 of the Income Tax Act, 1961 (the Act) concerning AY 2009-10.

2. As per the grounds of appeal, the assessee has challenged the assumption of jurisdiction under Section 147 of the Act as well as additions of Rs.8,95,285/- on account of client code modification.

3. We have heard the parties in length and perused the first appellate order and the re-assessment order. The material referred to and relied upon in the course of hearing has also been taken into consideration.

4. Since the assessee has raised the legal question of wrongful usurpation of jurisdiction by the Assessing Officer to reopen the assessment concluded under Section 143(1) of the Act, it would thus be pertinent to deal with the aforesaid question at the outset as it goes to the root of the matter.

5. The ld. counsel for the assessee submits at the outset that Assessing Officer has wrongly assumed jurisdiction by issuing notice under Section 148 of the Act dated 30.03.2016 relevant to Assessment Year 2009-10 in question, without authority of law. The ld. counsel further submits that the ingredients of Section 147/148 of the Act are clearly not fulfilled in the instant case to enable the Assessing Officer to exercise jurisdiction and to proceed with the re-assessment proceedings. The ld. counsel contends that fulfillment of the indispensable requirement of formation of 'reason to believe' that chargeable income has escaped assessment, are clearly not met.

6. Adverting to the reasons recorded by the Assessing Officer under Section 148(2) of the Act, the ld. counsel submits that the concluded assessment under Section 143(1) in the instant case has been reopened on grossly vague and non descript reasons and thus the consequent belief formed thereon is merely a pretence and an empty formality.

7. The reasons recorded in terms of Section 148(2) of the Act for conferment of jurisdiction to reassess the concluded assessment is reproduced hereunder for ready reference.

" Information had been received that certain brokers have indulged in creating non-genuine loses and profits for the clients who have taken fictitious losses to set off against their profits with a view to reduce their tax liability.

As per the investigation carried out by the investigation wing, it was found that the assessee is also a beneficiary and has got generated loss of Rs. 8,95,285/-. As per the IT filed by the assessee (Smt. Aruna Garg) they have shown business loss of Rs. 49,12,085/- during the A. Y. 2009-10.

Based on the above facts, I have reason to believe that income of at least Rs.8,95,285/- in A. Y. 2009-10, has escaped assessment within the meaning of the section 147 of the IT Act, 1961. Hence, there is need to issue notice u/s. 148 for assessment year 2009-10 in the cases of the assessee."

8. A bare perusal of the reasons recorded as quoted above suggests that Assessing Officer has propelled himself to reopen a........