2013 (7) TMI 912 - AT - Income Tax

Summary

Issues Involved:
1. Reopening of assessment u/s 147/148 of the IT Act.
2. Addition of Rs. 15,10,000/- out of Rs. 19,10,000/- on account of unsecured loan.
3. Addition of Rs. 7,45,424/- out of Rs. 15,45,424/- on account of current liabilities.
4. Enhancement of assessment by Rs. 25,72,264/- u/s 69B of the IT Act on account of unexplained investment in construction of building.

Summary:

1. Reopening of Assessment u/s 147/148:
The assessee challenged the reopening of assessment u/s 147/148 of the IT Act. The Tribunal found that the AO recorded reasons for reopening based on information received from the CIT(A) regarding the sale of flats. However, it was established that no flats were sold in the assessment year under appeal (2004-05). The AO did not make any addition on account of the sale of flats in the reassessment order. The Tribunal held that the AO did not have any document or material to indicate that the assessee sold any flat in the assessment year under appeal. The reasons for reopening were based on incorrect and non-existing facts, making the assumption of jurisdiction by the AO u/s 147/148 invalid. The reassessment proceedings were quashed.

2. Addition on Account of Unsecured Loan:
The assessee challenged the addition of Rs. 15,10,000/- out of Rs. 19,10,000/- made by the AO on account of unsecured loans. The CIT(A) reduced the addition to Rs. 15,10,000/-. However, since the reassessment proceedings were quashed, this addition was also deleted.

3. Addition on Account of Current Liabilities:
The assessee contested the addition of Rs. 7,45,424/- out of Rs. 15,45,424/- made by the AO on account of current liabilities. The CIT(A) reduced the addition to Rs. 7,45,424/- and directed the AO to delete Rs. 8,00,000/- subject to verification. As the reassessment was invalid, this addition was also deleted.

4. Enhancement of Assessment u/s 69B:
The CIT(A) enhanced the assessment by Rs. 25,72,264/- u/s 69B of the IT Act on account of unexplained investment in the construction of a building. Since the reassessment proceedings were quashed, this enhancement was also deleted.

Conclusion:
The Tribunal quashed the reassessment proceedings u/s 147/148 due to incorrect and non-existing reasons for reopening. Consequently, all resultant additions made by the AO and CIT(A) were deleted. The appeal of the assessee was allowed.