2015 (12) TMI 1173 - AT - Income Tax

Reopening of assessment - negligence on the part of the assessee in furnishing necessary particulars for completing the assessment in regard to capital introduced - Held that - The detailed questionnaire issued by the Assessing Officer to the assessee, shows that the Assessing Officer called for details with regard to capital introduced to the extent of ₹ 6,50,000/- and the advance receipt to the extent of ₹ 96,75,000/- for sale of the land. The assessee filed reply on 15.10.2009 as well as on 21.10.2009. The CIT(Appeals), by referring to the letter of the assessee dated 15.10.2009, observed that the reply given by the assessee is very vague, therefore, there was negligence on the part of the assessee in furnishing the required particulars. The CIT(Appeals) has not commented on the reply given by the assessee on 21.10.12009. The Ld. D.R. clarified that the assessee has also filed letter dated 21.10.2009 and a copy of the letter is available on the files of the Department. The assessment proceeding was completed originally on 23.10.2009. The assessee filed the letter on 21.10.2009. Therefore, it is obvious that the details with regard to advance receipt of ₹ 96,75,000/- and the capital to the extent of ₹ 6,50,000/- were very much available on the file of the Assessing Officer. In other words, the assessee has furnished the details with regard to the capital said to be introduced by the assessee to the extent of ₹ 6,50,000/- and the receipt of ₹ 96,75,000/- as advance for sale of land at Chinnasalem. The assessee has also filed a copy of the agreement dated 01.03.2006 before the Assessing Officer. In those factual situation, this Tribunal is of the considered opinion that the assessee has filed all the details before the Assessing Officer before completing the assessment. It is unfortunate that the CIT(Appeals) has not considered the letter of the assessee dated 21.10.2009, which was filed before the Assessing Officer. The letter dated 21.10.2009 is very clear and the assessee has explained before the Assessing Officer with regard to so-called capital of ₹ 6,50,000/- and receipt of ₹ 96,75,000/-. Thus there was no negligence on the part of the assessee in furnishing the required details for completing the assessment. Thus reopening of the assessment beyond four years period from the end of the relevant assessment year is not justified. - Decided in favour of assessee

Summary

Issues:
1. Reopening of assessment beyond the four-year period under Section 147 of the Income-tax Act, 1961.
2. Negligence on the part of the assessee in furnishing necessary particulars for completing the assessment.

Analysis:

Issue 1: Reopening of assessment beyond the four-year period under Section 147 of the Income-tax Act, 1961:
The appeal was against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2006-07. The Assessing Officer reopened the assessment beyond the four-year period, issuing a notice under Section 148 of the Act on 28.03.2013. The primary contention was whether the reopening was justified given the time limitation. The Tribunal noted that the notice for reopening was issued after the four-year period from the end of the relevant assessment year. The provisions of Section 147 allow for reopening only if there was negligence on the part of the assessee in furnishing necessary details. The Tribunal examined whether there was negligence based on the details provided during the assessment proceedings. The Tribunal concluded that since there was no negligence on the part of the assessee, the reopening of the assessment beyond the four-year period was not justified. Consequently, the orders of the lower authorities were set aside, and the reassessment was quashed.

Issue 2: Negligence on the part of the assessee in furnishing necessary particulars for completing the assessment:
The Assessing Officer reopened the assessment due to discrepancies in the sale consideration received by the assessee and the cash credit. The Departmental Representative argued that the assessee's replies were vague and lacked proper explanations. However, the Tribunal observed that the assessee had provided detailed explanations and documents regarding the capital introduced and the advance receipt for the sale of land. The Tribunal noted that the details were available to the Assessing Officer before completing the assessment. It was highlighted that the assessee had sufficiently clarified the issues in a letter dated 21.10.2009. The Tribunal found that the assessee had not been negligent in furnishing the required details for completing the assessment. Therefore, the Tribunal concluded that the reopening of the assessment was not justified based on the lack of negligence on the part of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the orders of the lower authorities and quashing the reassessment.