2016 (1) TMI 1405 - AT - Income Tax

Reopening of assessment - income chargeable to tax has escaped assessment within the meaning of section 147 - addition on such other income found during the course of assessment proceedings - HELD THAT - Assessing Officer has not made any addition with regard to the job work receipts alleged to have not been disclosed by the assessee. Therefore, in view of the case of Ranbaxy Laboratories Ltd. vs. CIT 2011 (6) TMI 4 - DELHI HIGH COURT and CIT vs. Jet Airways (I) Ltd. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY we are of the view that expression and also employed in section 147 of the Act has denuded the Assessing Officer to make any addition on any such other income found during the course of assessment proceedings unless addition is being made on an issue for which assessment is reopened. We allow the Cross Objections and quash the reassessment orders. Addition u/s 68 - unexplained cash credit - loans from friends - HELD THAT - Assessee has shown loans from friends and relatives and names of all these ten persons have been shown in the balance sheet. The credit balance against their names is identical as noticed by the Assessing Officer in para 11 of the assessment order. Thus these are the loans brought forward from earlier years. Addition u/s 68 can be made of the amount(s) which are noticed by the AO as credit balance in the account in the year in which they were introduced. These amounts have not been introduced for the first time in this year. Therefore, the nature and source cannot be enquired in this year. For this reason we allow this ground and delete the addition - Decided in favour of assessee

Summary

Issues:
1. Challenge to reopening of assessment in multiple assessment years.
2. Additional ground of appeal regarding Assessing Officer's authority to make additions.
3. Interpretation of the expression "and also" in section 147 of the IT Act.
4. Tax effect in Revenue's appeals below Rs. 10 lakhs.
5. Validity of proceedings initiated under section 147 of the IT Act.
6. Disallowance of expenses and unaccounted sales in assessment.

Analysis:

1. The case involved challenges to the reopening of assessments for various assessment years. The Tribunal heard all appeals and cross-objections together due to common issues. The jurisdictional issue of reopening assessments was addressed, with the assessee challenging the Assessing Officer's authority to make further additions beyond the reopened issues.

2. An additional ground of appeal was raised by the assessee regarding the Assessing Officer's jurisdiction to make additions. Citing relevant case law, the Tribunal permitted the assessee to raise this legal issue at any stage. The Tribunal considered the judgment of the Honorable Supreme Court and allowed the additional ground of appeal for one of the assessment years.

3. The Tribunal analyzed the expression "and also" in section 147 of the IT Act, referring to judgments of jurisdictional and other High Courts. It concluded that the Assessing Officer cannot make additions on any other income found during assessment proceedings unless an addition is made on the issue for which the assessment was reopened. The Tribunal allowed the cross-objections and quashed the reassessment orders based on this interpretation.

4. Considering the tax effect in Revenue's appeals being less than Rs. 10 lakhs, the Tribunal noted that the appeals were not maintainable before the Tribunal as per CBDT instructions. Consequently, the cross-objections of the assessee were allowed, leading to the dismissal of Revenue's appeals for the relevant assessment years.

5. The validity of proceedings initiated under section 147 of the IT Act was questioned by the assessee. The Tribunal dismissed some grounds raised by the assessee while allowing others, such as the challenge to the addition of unexplained loans carried forward from earlier years.

6. The Tribunal addressed various issues related to the disallowance of expenses and unaccounted sales during assessments for different assessment years. It considered the arguments presented by both parties and made decisions based on legal interpretations and factual evidence presented during the proceedings.

In conclusion, the Tribunal made detailed analyses and decisions on the issues raised by the parties, considering legal provisions, case laws, and factual circumstances presented during the proceedings.