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Assessing Officer is duty bound to explicitly record the reasons for reopening proceeding
This is a recent judgment of High Court of Bombay rendered under the erstwhile re-assessment regime of the Inco
me-tax Act, 1961
The reassessment proceedings were initiated through issuance of notice under section 148 of the Income-tax Act on the ground that the assessee was one of the beneficiaries of the accommodation entries by way of loan. To rebut such allegations, the assessee had furnished bank statements and other supporting documents.
The High Court held that once the assessee has by production of bank statements and supporting documents rebutted the belief of the Assessing Officer that the assessee is one of the beneficiaries of accommodation entry, the onus shifts on the Assessing Officer to provide reasons to disbelieve the bank statements and supporting documents furnished by the assessee.
Since in the case under consideration, the reasons to disbelieve the documentary evidences were not spelled out by the Assessing Officer in the order disposing objections, the reassessment proceedings deserves to be stalled.
Applicability of judgment to new reassessment scheme
Accordingly one of the jurisdictional conditions to be fulfilled for initiation and sustainability of reassessment proceedings is that the Assessing Officer is duty bound to explicitly record the reasons in the order passed under clause (d) of section 148 for disbelieving or rebutting the documentary evidences furnished by the assessee in response to notice issued under section 148A(b) of the Act