2019 (4) TMI 1778 - AT - Income Tax

Reopening of assessment u/s 147 - period of limitation for reopening u/s 147 - HELD THAT - Notice u/s 148 was issued for assessment year 1998-99 invoking limitation of 16 years provided in section 149(c) of the Act for holding bank account in HSBC Zeneva. In the said decision the Hon ble Delhi High Court has relied on the decision of the Hon ble Supreme Court in the case of K.M. Sharma vs. ITO 2002 (4) TMI 7 - SUPREME COURT wherein held that law of limitation was intended to give certainty and finality to legal proceedings and therefore proceedings which had attained finality under the existing law due to bar of limitation could not be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting proceedings which has already been completed and attained finality. In view of the facts of the instant case being identical to facts in the case of Brahma Datt 2018 (12) TMI 832 - DELHI HIGH COURT respectfully following the decision of the Hon ble Delhi High Court the notice issued under section 148 of the Act is held to be barred by limitation and the reassessment proceeding are accordingly quashed. Since we have already quashed the reassessment proceeding on the ground of the limitation of notice under section 148 of the Act we are not adjudicating the other argument challenging the validity of the reassessment as well as addition on merit as same are rendered only as an academic exercise

Issues Involved:
1. Validity of reassessment proceedings under Section 147 read with Section 148.
2. Limitation period for issuing notice under Section 148.
3. Addition of unexplained deposits in HSBC Geneva account.
4. Addition of interest on deposits in HSBC Geneva account.
5. Taxation of the same income twice.

Detailed Analysis:

Validity of Reassessment Proceedings:
The assessee challenged the reassessment proceedings initiated under Section 147 read with Section 148, arguing that the conditions and procedures prescribed under the statute were not satisfied. The reassessment was based on the assessee's undisclosed foreign bank account in HSBC Geneva, which was not reported to the Income-tax Department. The Tribunal noted that the reassessment was initiated based on the statement recorded under Section 132(4) during a search proceeding, and the assessee had declared the outstanding balance in the HSBC account for AY 2012-13. The Tribunal upheld the validity of the reassessment proceedings, noting that the Assessing Officer had sufficient reasons to believe that income had escaped assessment.

Limitation Period for Issuing Notice:
The assessee argued that the notice issued under Section 148 was barred by limitation, as the period for reopening under Section 147 had expired on 31/03/2004. The Tribunal referred to the amendment introduced by the Finance Act, 2012, which extended the limitation period to 16 years for assets located outside India. However, the Tribunal relied on the Delhi High Court's decision in Brahm Datt Vs ACIT, which held that the limitation period could not be extended retrospectively to reopen assessments that had already attained finality. Consequently, the Tribunal quashed the notice issued under Section 148 as barred by limitation.

Addition of Unexplained Deposits:
For AY 1997-98, the Assessing Officer added Rs. 56,10,737 as unexplained deposits in the HSBC Geneva account, presuming that the opening balance in HSBC Bank must have remained in the account since its opening in FY 1996-97. The explanation provided by the assessee regarding the initial deposit being received through a will was not accepted due to a lack of documentary evidence. The Tribunal did not adjudicate this issue on merits, as the reassessment proceedings were quashed on the ground of limitation.

Addition of Interest on Deposits:
For AY 1997-98 and 1998-99, the Assessing Officer added Rs. 3,09,152 as interest income on the deposits in the HSBC Geneva account. The interest rate was presumed to be 5.5%. The Tribunal did not address this issue on merits, as the reassessment proceedings were quashed on the ground of limitation.

Taxation of the Same Income Twice:
The assessee contended that the same income was being taxed twice, once in the assessment year under consideration and again in AY 2012-13. The Tribunal did not adjudicate this issue, as the reassessment proceedings were quashed on the ground of limitation.

Conclusion:
The Tribunal allowed the appeals for both assessment years 1997-98 and 1998-99, quashing the reassessment proceedings on the ground that the notice issued under Section 148 was barred by limitation. The Tribunal did not address other issues on merits, as they were rendered academic due to the quashing of the reassessment proceedings.

← Previous Next →