‘I-T Can’t Reopen Assessment Merely on Belief of Evasion’

Assessing officer also cannot blindly follow opinion of audit authority, rules HC bench     The Bombay High Court has ruled that an Income-Tax officer cannot reopen a completed assessment merely on the belief that there has been evasion of tax, nor can he exercise this power just because an audit authority has advised so.  A division bench of justices SJ Vazifdar and MS Sanklecha passed the order on July 20 while hearing an appeal by ICICI Housing Finance. The mortgage lender had challenged the assessing officer's notice to reopen an assessment completed in 2006-07.  "The assessing officer cannot blindly follow the opinion of an audit authority for the purpose of arriving at a belief that income has escaped assessment," the bench said, quoting the Supreme Court judgment in the case of Indian and Eastern Newspaper Society.  Auditors in the Income-Tax department go through all the tax assessments and point out deficiencies, if any, that require to be corrected. At times, the auditing authority also sends reports to the internal vigilance machinery if it feels something is amiss in the assessments.  The bench also noticed that the reasons put forward for reopening the case are identical to the objections raised by the audit authority. The audit authority's reasons do not rely on any tangible material but merely upon the existing material already on record.  "This itself indicates that there was no independent application of mind by the assessing officer before he issued the impugned notice," the bench said.  m.padmakshan@timesgroup.com  Reasoning it Out  • A DIVISION BENCH OF HC PASSED  the order last month while hearing an appeal by ICICI Housing Finance  • ICICI HOUSING FINANCE HAD  challenged the assessing officer's notice to reopen an assessment completed in 2006-07