2013 (4) TMI 703 - AT - Income Tax

Reopening of assessment - receipt of commission from Regency Hospital Ltd. on which tax deducted at source was not deducted - whether the additions made on different issues in a reassessment proceedings after having satisfied on an issue on which the assessment was reopened, are sustainable in the eyes of law? - Held that - It is abundantly clear that the Assessing Officer has not made any addition with respect to receipt of commission from Regency Hospital Ltd. on which the assessment was reopened by the Assessing Officer. The Assessing Officer has made addition on other issues which were not part of the reasons recorded for reopening the assessment. Therefore, in the light of judgments Ranbaxy Laboratories Ltd. v. CIT reported in 2011 (6) TMI 4 - DELHI HIGH COURT & CIT v. Software Consultants 2012 (2) TMI 18 - the assessment framed by the Assessing Officer on other issues is not sustainable in the eyes of law. We accordingly set aside the assessment framed on other issues. Since the entire assessment is quashed, we find no justification to adjudicate the appeal on other grounds. Accordingly, the appeal of the assessee stands allowed. - Decided in favour of assesse.

Issues Involved:
1. Ex parte decision without adequate opportunity of being heard.
2. Non-consideration of facts in the statement of facts.
3. Non-speaking order contrary to natural justice.
4. Addition due to alleged suppression of debtors.
5. Addition on account of unexplained creditors.
6. Addition due to suppression of debtors.
7. Addition on account of unexplained investment.
8. Validity of reassessment under section 148.

Detailed Analysis:

1. Ex parte decision without adequate opportunity of being heard:
The appellant contended that the Commissioner of Income-tax (Appeals) erred in law and on facts by deciding the appeal ex parte without providing an adequate opportunity of being heard. This was claimed to be contrary to the facts of the case.

2. Non-consideration of facts in the statement of facts:
The appellant argued that the Commissioner of Income-tax (Appeals) dismissed the appeal without considering the facts enumerated in the statement of facts filed at the time of the appeal. This was seen as an error in law and on facts.

3. Non-speaking order contrary to natural justice:
The appellant claimed that the order of the Commissioner of Income-tax (Appeals) was a non-speaking order without proper adjudication, contrary to the principle of natural justice, and thus bad in law.

4. Addition due to alleged suppression of debtors:
The appellant contended that the Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs. 89,508 made by the Assessing Officer due to alleged suppression of debtors. The appellant argued that this was merely an error in the name in the balance sheet (Shanti Developers instead of Srishti Developers).

5. Addition on account of unexplained creditors:
The appellant argued against the confirmation of the addition of Rs. 3,00,000 on account of unexplained creditors, asserting that the amount was received via cheque and duly credited in the bank account.

6. Addition due to suppression of debtors:
The appellant contested the confirmation of the addition of Rs. 3,23,250 on account of suppression of debtors, claiming that the clarification/explanation given in the statement of facts was ignored.

7. Addition on account of unexplained investment:
The appellant argued against the confirmation of the addition of Rs. 51,920 on account of unexplained investment alleged to have been made out of undisclosed sources, stating that the facts clarified in the statement of facts were ignored.

8. Validity of reassessment under section 148:
The appellant moved an application for the admission of an additional ground of appeal, challenging the validity of the assessment framed under section 143(3) read with section 147 of the Act. The appellant argued that the reassessment was without jurisdiction and bad in law since no addition was made regarding the alleged escapement of income for which action under section 147/148 was initiated. The appellant cited judgments from the Delhi High Court (CIT v. Software Consultants and Ranbaxy Laboratories Ltd. v. CIT) and the Bombay High Court (Jet Airways (I) Ltd.) to support this contention.

Decision:
The tribunal examined the issue of whether additions made on different issues in reassessment proceedings are sustainable if the Assessing Officer did not make any addition regarding the issue on which the assessment was reopened. Citing various judicial pronouncements, including the judgments from the Bombay High Court in Jet Airways (I) Ltd. and the Delhi High Court in Ranbaxy Laboratories Ltd. and Software Consultants, the tribunal concluded that if the Assessing Officer does not make an addition on the issue for which the assessment was reopened, he cannot independently assess other income without issuing a fresh notice under section 148. Consequently, the tribunal set aside the assessment framed on other issues and allowed the appeal of the assessee, quashing the entire assessment.

Result:
The appeal of the assessee was allowed, and the order pronounced in the open court on April 25, 2013.

← Previous Next →