2010 (9) TMI 1190 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing cross objections.
2. Validity of proceedings initiated under Section 147 of the Income Tax Act.
3. Addition of income from undisclosed sources under Section 68 of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing Cross Objections:
The assessee filed duplicate cross objections due to a delay of 44 to 50 days, attributing the delay to the illiteracy of the servant who received the notice. After considering the rival submissions, the tribunal condoned the delay, concluding that the assessee was prevented by sufficient cause from filing the cross objections within the stipulated time.

2. Validity of Proceedings Initiated Under Section 147 of the Income Tax Act:
The primary issue was the validity of the initiation of proceedings under Section 147 of the Act. The assessee argued that the original assessment was completed on 31.07.2001, and all necessary disclosures were made. The reassessment proceedings initiated after four years based on a change of opinion were not permissible under the proviso to Section 147. The tribunal referenced several cases, including CIT vs. Kelvinator of India Limited, which emphasized that reassessment cannot be based on a mere change of opinion and must be supported by tangible material. The tribunal concluded that the reopening of the assessment was not justified as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.

3. Addition of Income from Undisclosed Sources Under Section 68 of the Income Tax Act:
The Revenue appealed against the CIT(A)'s order, which deleted the addition made by the A.O. as income from undisclosed sources on account of alleged bogus accommodation entries. The tribunal noted that the original assessment accepted the long-term capital gains (LTCG) shown by the assessee, and all necessary evidence regarding the purchase and sale of shares was provided. The tribunal found no new material to justify the reassessment and emphasized that the A.O. had not brought any evidence to prove the transactions were bogus. The tribunal upheld the CIT(A)'s decision, stating that the addition under Section 68 was not justified.

Conclusion:
The tribunal dismissed the appeals filed by the Revenue and the duplicate cross objections filed by the assessee. The tribunal partly allowed the other cross objections filed by the assessee, concluding that the reassessment proceedings were invalid and the addition under Section 68 was not justified.