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2015 (7) TMI 606 - AT - Income TaxValidity of reopening of assessment - whether there is a bar on reopening all the assessments which was completed u/s. 153A/153C r.w.s. 143(3) ? - unreported gross receipts - Held that - There is escapement of income while framing original assessment order u/s.153C r.w.s 143(3) of the Act. It is apparent that the omission of the assessee to bring it to the Assessing Officer s notice those particulars of seized material, will amount to omission to disclose fully and truly all materials facts necessary for its assessment. The assessee having failed to draw the attention of the Assessing Officer regarding seized documents, it cannot be said that there is no violation of provisions of the Act. Further, when no opinion has been expressed in the assessment order and no details or explanation in relation to the seized document has been called for by the Assessing Officer, it is not possible to accept the contention of the assessee that the Assessing Officer has applied his mind to the said aspect. In the light of the aforesaid discussion, we are of the view that in the light of the reasons recorded by the Assessing Officer, there was sufficient material for Assessing Officer to form the requisite belief that income has escaped assessment for the assessment year under consideration. The assumption of jurisdiction under section 147 by issuance of notice under section 148 of the Act is valid and legal and as such no case is made out for intervention by this Tribunal. Therefore, the assessee fails in this ground. This ground is rejected. Whether the reassessment were time barred as per provision u/s.149? - Held that - The time limit within which the notice under section 148 can be issued, as provided in section 149 has also been made in applicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under section 148 has also been excluded in a case covered by section 153A/153C of the Act. The time limit prescribed for completion of an assessment or reassessment by section 153 has also been done away with in a case covered by section 153A. With all the stop having been pulled out, the Assessing Officer under section 153A/153C has been entrusted with the duty of bringing to tax the total income of an assessee who case is covered by section 153A/153C, by even making reassessments subject to provision u/s.153B of the Act. Accordingly, the contention of the ld. Authorised Representative for assessee is that the assessment is time barred is rejected. It is not appropriate to consider the entire unaccounted gross receipts as income of the assessee. The assessee has to incur certain expenditure for the unaccounted receipts also. Being so, in our opinion, it is appropriate to consider only gross profits on this unaccounted contact receipts as the income of the assessee. The Assessing Officer is directed to adopt the last three years average gross profits rate disclosed by the assessee in immediate preceding years to determine the income from unaccounted contract receipts. Further, we make it clear that the assessee shall be given an opportunity to go through the seized materials on the basis of which the Assessing Officer determine the unaccounted gross receipts of the assessee before arriving the unaccounted gross contract receipts. With these observations, this issue for limited purpose is remitted back to the file of the Assessing Officer for quantification of income in all these three assessment years. - Decided partly in favour of assessee for statistical purposes.
Issues Involved:
1. Validity of reopening assessments under Section 148 after assessments under Section 153C. 2. Justification for reassessment based on "reason to believe" that income has escaped assessment. 3. Time-barred reassessment under Section 149. 4. Quantum of income considered as undisclosed income. Detailed Analysis: 1. Validity of Reopening Assessments under Section 148 after Assessments under Section 153C: The assessee argued that once an assessment is completed under Section 153C read with Section 143(3), it cannot be reopened under Section 147 to issue a notice under Section 148. The Tribunal dismissed this argument, stating that Section 147 permits reassessment of income that has escaped assessment, subject to the provisions of Sections 149 and 153. The Tribunal emphasized that there is no bar on reopening assessments completed under Section 153A/153C if there is a reason to believe that income escaped assessment. 2. Justification for Reassessment Based on "Reason to Believe" that Income Has Escaped Assessment: The Tribunal highlighted that for reopening an assessment, the Assessing Officer must have "reason to believe" that income has escaped assessment. This term means that the officer must have cause or justification to know or suppose that income had escaped assessment. The Tribunal referenced the Supreme Court's decision in CIT vs. Kelvinator of India Limited, which clarified that post-April 1, 1989, the power to reopen is much wider, provided there is "tangible material" indicating escapement of income. The Tribunal found that the Assessing Officer had sufficient material to form the requisite belief that income had escaped assessment, thus justifying the issuance of notice under Section 148. 3. Time-Barred Reassessment under Section 149: The assessee contended that the reassessment was time-barred under Section 149. The Tribunal noted that Section 153A allows the Assessing Officer to assess or reassess the total income for the last six preceding assessment years. The non obstante clause in Section 153A overrides the time limits prescribed in Section 149, making the reassessment valid. The Tribunal rejected the argument that the reassessment was time-barred. 4. Quantum of Income Considered as Undisclosed Income: The assessee argued that the entire unaccounted contract receipts should not be considered as undisclosed income. The Department contended that the gross contract receipts, as per the seized materials, should be considered as income since business expenditure had already been accounted for in regular books. The Tribunal agreed with the assessee that it is not appropriate to consider the entire unaccounted gross receipts as income. Instead, only the gross profits on these unaccounted receipts should be considered as income. The Tribunal directed the Assessing Officer to adopt the average gross profit rate disclosed by the assessee in the last three years to determine the income from unaccounted receipts. This issue was remitted back to the Assessing Officer for quantification of income, with the assessee given an opportunity to review the seized materials. Conclusion: The Tribunal upheld the validity of reopening the assessments under Section 148, justified the reassessment based on "reason to believe," rejected the argument that the reassessment was time-barred, and directed the Assessing Officer to consider only the gross profits on unaccounted receipts as income. The assessee's appeals were allowed for statistical purposes, and the matter was remitted back for quantification of income.
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