2009 (12) TMI 1005 - AT - Income Tax

Summary

Issues Involved:
1. Legality of reopening the assessment.
2. Validity of the assessment order framed beyond the time limit.
3. Confirmation of additions on account of bogus investment in share capital.

Summary:

1. Legality of Reopening the Assessment:
The assessee contended that the reopening of the assessment was invalid as it was based merely on the direction given by the Commissioner of Income Tax (Appeals) [CIT(A)] in the block assessment. The Tribunal held that the CIT(A) had no power to give such a direction, and thus, the reopening of the assessment on 6.3.2006 was beyond the prescribed time limit and bad in law. The Tribunal allowed the application for admission of additional grounds raised by the assessee, emphasizing that the order of the Tribunal dated 17.10.2008, which quashed the CIT(A)'s direction, was non-existent at the time of filing the appeal.

2. Validity of the Assessment Order Framed Beyond the Time Limit:
The Tribunal noted that the prescribed limit for issuing a notice u/s 148 is six years, which had already expired as the notice was supposed to be issued by 31.3.2004. The Tribunal further stated that the provisions of sections 150 to 152 were not applicable since the direction of the CIT(A) had been quashed, making the reopening of the assessment invalid.

3. Confirmation of Additions on Account of Bogus Investment in Share Capital:
The Tribunal referred to its previous order in the block assessment case of the assessee, where it was held that there was no justification for making any addition of Rs. 28.35 lakhs as no evidence was found during the search to suggest that the share capital was bogus or non-genuine. The Tribunal quashed the direction issued by the CIT(A) to initiate reassessment proceedings u/s 148 for the assessment years 1996-97, 1997-98, and 2002-03. It was emphasized that the share capital appeared in the books of accounts of the assessee company prior to the search, and no independent belief or finding was recorded by the Assessing Officer.

Conclusion:
The Tribunal concluded that the reopening of the assessment was invalid and beyond the prescribed time limit. Consequently, the appeals of the assessee were allowed, and the assessment orders were quashed. The Tribunal pronounced the order in open Court on 11th December, 2009.