2015 (1) TMI 1021 - HC - Income Tax

Reopening of assessment - ITAT held reopening as illegal as beyond four years and the assessee has fully disclosed true and complete facts, necessary for assessment - ITAT came to conclusion that the Appellate Commissioner has not committed any error in allowing the assessee to produce new material in violation of Rule 46A - Held that - We are in complete agreement with the view taken by the Tribunal. The Tribunal has given cogent and convincing reasons in arriving at the conclusion. We do not find any reason to interfere with the order of the Tribunal. Hence, the present appeals are dismissed. Accordingly, we hold that the Tribunal was right in law in coming to the conclusion that reopening of assessment for Assessment Year 1989-90 under Section 147 read with Section 148 of the Income Tax Act is illegal. The Tribunal was also right in coming to the conclusion that the Appellate Commissioner has not committed any error in allowing the assessee to produce new material on record. - Decided in favour of assessee.

Summary

Issues:
1. Challenge to the common order of the Income Tax Appellate Tribunal by the appellant-revenue.
2. Reopening of assessment for Assessment Year 1989-90 under Section 147 read with Section 148 of the Income Tax Act.
3. Allegation of violation of Rule 46A of the Income Tax Rules by the Appellate Commissioner.

Analysis:
1. The appeals by the appellant-revenue challenged the common order of the Income Tax Appellate Tribunal dated 31.10.2006. The appellant-revenue contended that the Tribunal erred in dismissing the appeals and confirming the order of the Commissioner of Income Tax (Appeals). The primary issue revolved around the legality of the reopening of assessment for the Assessment Year 1989-90 under Section 147 read with Section 148 of the Income Tax Act.

2. The Tribunal observed that the Assessing Officer failed to discuss the issue of cash payments exceeding Rs. 10,000 during the original assessment. The Tribunal highlighted that the obligation of the assessee is to provide primary facts fully and truly, leaving the Assessing authority to seek further information if necessary. The Tribunal emphasized that the reopening of assessment beyond four years from the relevant assessment year requires a showing of infirmity in the disclosure made by the assessee, which was absent in this case. The Tribunal found no grounds to support the reopening of assessment and upheld the decision in favor of the assessee.

3. The Tribunal also addressed the allegation of violation of Rule 46A of the Income Tax Rules by the Appellate Commissioner. The Commissioner allowed the assessee to produce new material without providing an opportunity to the Revenue. The Tribunal concurred with the Commissioner's decision, stating that the reassessment was time-barred under the proviso to Section 147 due to the absence of any failure by the assessee to meet disclosure requirements. The Tribunal declined to interfere with the Commissioner's order, affirming the decision in favor of the assessee.

4. The High Court upheld the Tribunal's decision, stating that the Tribunal provided cogent and convincing reasons for its conclusions. The Court found no grounds to interfere with the Tribunal's order, leading to the dismissal of the appeals. The Court affirmed that the reopening of assessment for the Assessment Year 1989-90 was illegal and that the Appellate Commissioner did not err in allowing the assessee to introduce new material. The judgment favored the assessee and ruled against the revenue, concluding the legal proceedings on the matter.