2013 (12) TMI 1170 - AT - Income Tax

Unexplained investment under section 69C Held that - The assessee has not submitted any evidence before the CIT(A) - The CIT(A) is not justified in deleting the same The issue was restored for fresh decision. Re-opening of assessment u/s 147 Held that - Original assessment was framed u/s 144/147 on 8.12.2006 is a Regular Assessment as defined in sub-section (40) of Section 2 of the Act. While framing the original Assessment, Balance-Sheet as well as Audited Accounts were available on record before the AO - While framing this assessment the AO formed an opinion in respect of project advances shown by the assessee in the Balance Sheet as liability - A concluded assessment cannot be reopened beyond a period of four years from the end of the relevant Assessment Year unless there was failure on the part of the assessee to disclose fully and truly all material facts necessary for making assessment - In this case, the assessee has disclosed complete particulars regarding project advances in the Balance Sheet - The assessee has not suppressed any material facts and there is no documents on record from which an opinion can be formed that income of the assessee has escaped assessment - Following Parixit Industries (P) Ltd V/s ACIT 2012 (4) TMI 464 - GUJARAT HIGH COURT In the absence of existence of any tangible material to come to the conclusion that there was escapement of income from assessment, the Assessing Officer exceeded his authority to reopen the assessment merely on the basis of a change of opinion - Decided against Revenue.

Summary

Issues:
1. Reopening of assessment u/s 147 beyond four years from the assessment year.
2. Treatment of project advances as income.
3. Violation of provisions u/s 269T for cash repayment of loan.
4. Failure to disclose fully and truly all material facts for assessment.

Analysis:

Issue 1: Reopening of assessment u/s 147 beyond four years from the assessment year
The appeal was against the order of the ld.CIT(A) for the assessment year 2003-04. The AO reopened the assessment u/s 147 r.w.s.148 based on reasons related to unaccounted project advances and cash repayments of loans. The ld. CIT(A) quashed the reassessment notice, stating that it was issued beyond the four-year limit and there was no failure on the part of the appellant to disclose material facts necessary for assessment. The Tribunal upheld the ld. CIT(A)'s decision, emphasizing that the assessment could not be reopened beyond four years without a failure to disclose material facts.

Issue 2: Treatment of project advances as income
The AO added Rs.21,22,000 as income, considering project advances as non-refundable contract receipts. The ld. CIT(A) disagreed, stating that the revenue from such advances should be recognized upon sale or possession of houses, following accepted accounting methods. The Tribunal upheld the ld. CIT(A)'s decision, noting that the assessee had disclosed project advances in the balance sheet, and there was no suppression of material facts justifying the addition as income.

Issue 3: Violation of provisions u/s 269T for cash repayment of loan
The AO alleged a violation of section 269T due to cash repayments of loans. The ld. CIT(A) found this reasoning erroneous, stating that such transactions relate to capital accounts and do not impact the total income. The Tribunal agreed, emphasizing that a default under section 269T may attract penalties but does not lead to income escapement.

Issue 4: Failure to disclose fully and truly all material facts for assessment
The ld. CIT(A) highlighted that the appellant had fully disclosed project advances and loan repayments in the audit report. The Tribunal concurred, stating that there was no failure to disclose material facts, and the reassessment notice was without jurisdiction. The decision was supported by legal precedents emphasizing the assessee's obligation to disclose facts, not interpret legal provisions.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the ld. CIT(A)'s decision to quash the assessment due to the notice being issued beyond the statutory limit and the absence of failure to disclose material facts. The judgment reaffirmed the importance of adhering to legal timelines and the necessity of full and truthful disclosure in tax assessments.