A Bench of Justices Uday Umesh Lalit and Ravindra Bhat held that basis for a valid re-opening of assessment is availability of tangible material, which can lead the Assessing Officer (AO) to scrutinize the returns for the previous assessment year in question, to determine, whether a notice under Section 147 is called for
“As long as there is objective tangible material (in the form of documents, relevant to the issue) the sufficiency of that material cannot dictate the validity of the notice,” the Court said.
The assessees having a reasonable explanation is not a ground for quashing a notice under Section 147 of the Act, the Bench observed with respect to the High Court order under challenge.
“The information or ‘tangible material’ which the assessing officer comes by enabling re-opening of an assessment, means that the entire assessment (for the concerned year) is at large; the revenue would then get to examine the returns for the previous year, on a clean slate as it were. Therefore, to hold as the High Court did, in this case, that since the assessee may have a reasonable explanation, is not a ground for quashing a notice under Section 147,” the Court added.
Source: Barandbench
