Reasons are required to be recorded by the AO on valid material and an assessment cannot be reopened on mere assumptions, as held by MumTrib in Weizmann Capital Ltd v ACIT — In favour of: The assessee; ITA No 7136/Mum/2006: (AY 1999–2000).
The reopening of an assessment is legally unsustainable if the AO has, ultimately, not completed the assessment on the strength of the reasons recorded for the reopening of the assessment but on altogether different grounds.
The income, which the AO initially formed a reason to believe had escaped assessment, has, as a matter of fact, not escaped assessment. It is not open to the AO to independently assess some other income.
Appeals (Appellate Tribunal) — When the facts are available on record, the Tribunal has the power to admit a legal ground raised even for the first time before the Tribunal.
Decided on: 27 May 2011.
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