2020 (2) TMI 1305 - AT - Income Tax

Reopening of assessment u/s 147 - reasons for reopening of assessment - HELD THAT - As decided in MR. KAILASH KANHAIYALAL GIDWANI MR. SUNIL KANHAIYALAL GIDWANI MR. AMIT KANHAIYALAL GIDWANI 2019 (10) TMI 905 - ITAT PUNE transaction was properly recorded in the assessee s books of account. The assessee is payer and not the recipient of loan. Once the assessee paid 2.00 lakh to Kanhaiyalal Vishandas Gidwani out of her regular books of account there cannot be any question of the assessee not substantiating the source of loan which is overtly from the regular books of account maintained by her. This sort of enquiry if warranted ought to have been conducted in the hands of the recipient to justify the source of the loans received and not the payer of the loan who has given loan out of her regular books of account. It is clear that the reasons recorded by the AO for initiating reassessment proceedings are invalid and do not justify initiation of re-assessment. Existence of reasons for escapement of income are sine qua non to embark upon the assessment or reassessment u/s 147 - Change or no change of opinion as argued by the DR are the factors to be considered after fulfilling the jurisdictional condition of there being an escapement of income in the absence of which no assessment or reassessment can be made u/s 147. As it is apparent from the above discussion that no valid reasons exist about the escapement of the assessee s income we hold that the AO was not justified in taking recourse to the provisions of section 147 - We therefore strike down the initiation of assessment proceedings and the consequential assessment order passed u/s 147. AO was not justified in taking recourse to the provisions of section 147 . We therefore strike down the initiation of assessment proceedings and the consequential assessment order passed u/s 147 of the Act and also the impugned order. - Decided in favour of assessee.

Summary

Issues:
Appeal against CIT(A) order for Assessment Year 2008-09.

Analysis:
The appeal was filed by the assessee against the order of CIT(A)-1, Kolhapur, for the Assessment Year 2008-09. The assessee, an individual deriving income from various sources, had filed the return of income on 12.01.2009 declaring total income at ?11,14,890. The case was reopened by the Assessing Officer (AO) under section 148 of the Income-tax Act, 1961. The AO completed the assessment by making various additions, which the CIT(A) upheld. The assessee contended that no additions were made for the reasons recorded for reopening the assessment, rendering the other additions unsustainable. The Tribunal referred to a similar case where relief was granted to the assessee, emphasizing that the AO was not justified in taking recourse to section 147 of the Act. The Tribunal held that no valid reasons existed for the escapement of income, striking down the initiation of assessment proceedings and the consequential assessment order passed under section 147 of the Act. The appeal was allowed, and the legal grounds raised by the assessee were upheld. The Tribunal concluded that since the legal issue had been adjudicated, the issue on merits became infructuous. The appeal of the assessee was allowed, and the order was pronounced on February 12, 2020.