2017 (8) TMI 1503 - HC - Income Tax

Reopening of the assessment u/s 147 - deduction u/s 80IC - search u/s 153A - Held that - As noticed that in the reasons for reopening the assessment, a reference was made to the search conducted on the Assessee on 21st January, 2011, and that in the assessment for the Assessee s sister concern Dharampal Premchand Limited on the basis of the said search u/s 153A it was held by the ITAT that the material seized did not constitute incriminating material even qua the sister entity concerned. Indeed today by a separate order in the appeals filed by the Revenue against the order of the ITAT in the cases of the sister concern, this Court has concurred with the decision of the ITAT in holding that the material seized in the course of search did not constitute incriminating material even for FY 2010-11, i.e., the year of search. In that view of the matter the very fundamental basis for reopening is rendered non-existent. This Court does not consider it necessary to consider the further question whether there was a justification for reopening the assessment qua the Assessee for the AY in question. - Decided in favour of the Assessee and against the Revenue.

Summary

Issues:
Appeal against ITAT order for AY 2004-05 - Justification of cancellation of reassessment under Sections 147/148 of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the Revenue against an ITAT order for the assessment year 2004-05. The main issue was whether the ITAT was correct in deleting the additions made due to the reopening of the assessment under Section 147 of the Income Tax Act, 1961. The ITAT observed that there was no fresh tangible material justifying the reopening for the year in question. The original assessment had already addressed the deduction under Section 80IC of the Act thoroughly. The reasons for reopening mentioned a search conducted on the Assessee on a specific date, but it was noted that the material seized did not constitute incriminating evidence even for the Assessee's sister concern in a separate case under Section 153A of the Act.

In a separate order concerning the appeals against the ITAT's decision in the sister concern's cases, the Court agreed with the ITAT that the seized material did not incriminate even for the fiscal year 2010-11. This finding rendered the fundamental basis for reopening the assessment for the Assessee non-existent. Consequently, the Court deemed it unnecessary to delve into the question of whether there was a valid reason for reopening the assessment for the Assessee for the relevant assessment year.

The Court answered the question framed on 30th January, 2017, in favor of the Assessee and against the Revenue. As a result, the appeal was dismissed.