AO must independently form a reasoned belief while initiating proceedings u/s 147: Bombay HC
In its recent pronouncement in the matter of Principal Commissioner of Income Tax v. Agfa India Pvt. Ltd., ITA No. 1857 of 2018, the Hon’ble Bombay High Court affirmed the decision rendered by the ITAT, Mumbai. The High Court unequivocally held that the AO must independently form a reasoned belief while initiating proceedings u/s 147 of the Income Tax Act, and such belief cannot be predicated upon the directions or opinions of any other authority, irrespective of their hierarchical superiority.
Factual Matrix:
In the present case, the AO had proceeded to issue a notice for reassessment solely on the basis of information transmitted by the TPO to the JCIT, pursuant to which the JCIT directed the AO to initiate reassessment proceedings. The AO erroneously construed such communication as binding and, considering himself statutorily obligated to comply, issued the impugned notice u/s 148 and passed the reassessment order accordingly.
The said reassessment order was assailed before the CIT(A), and thereafter before the ITAT. The Hon’ble Tribunal, upon a comprehensive appraisal of the facts and legal position, ruled in favour of the assessee and annulled the reassessment proceedings. The High Court, concurring with the Tribunal’s reasoning, upheld the quashing of the reassessment order.
The copy of the order is under:
