2018 (4) TMI 1896 - AT - Income Tax

Rectification of mistake u/s 254 - mistake apparent on record to the extent of not considering the correct facts on the issue of validity of reopening of the assessment - assessee has contended that the said amount has been duly disclosed in the return of income as part of the long term capital gain on sale of shares - HELD THAT - We note that though the Tribunal while passing the impugned order has rejected the contention of the assessee against the validity of reopening however this particular fact whether the assessee has disclosed this amount in the return of income or not has escaped consideration by the Tribunal while deciding the issue. Hence we are of the considered view that there is a mistake apparent on record in the impugned order and consequently we recall the impugned order of the Tribunal for fresh hearing and adjudication of the matter. The registry is directed to fix the appeal of the assessee for fresh hearing and adjudication in regular course. The parties to be informed about the next date of hearing. In the result the miscellaneous application is allowed.

Summary

Issues:
Validity of reopening of assessment based on undisclosed income.

Analysis:
The assessee filed a return of income disclosing the transaction of sale of shares and consequential long term capital gain. The Assessing Officer reopened the assessment stating that a sum of ?5,60,845 had not been shown in the return of income, leading to the belief that income had escaped assessment. The assessee objected, highlighting that the amount was duly disclosed in the return. However, the AO, in disposing of the objections, did not consider the true facts. The Tribunal's order also did not address this crucial fact. The Tribunal decided against the assessee on the validity of reopening without considering whether the amount was disclosed in the return. The Tribunal recalled the order for fresh hearing and adjudication, recognizing the mistake in not considering the disclosure of the amount in the return of income.

The reopening of the assessment was based on the belief that the assessee had not disclosed a certain amount in the return of income. The AO's reasons for reopening focused on the alleged undisclosed income from transactions with MKM Finance Securities. The assessee contended that the amount was indeed disclosed as part of long term capital gain on the sale of shares. The Tribunal acknowledged that the issue of whether the amount was disclosed in the return was not adequately considered in the previous order. Therefore, the Tribunal allowed the miscellaneous application, recalling the order for a fresh hearing to address this crucial factual aspect.

In conclusion, the Tribunal's decision to recall the order for fresh hearing and adjudication was based on the mistake apparent on record regarding the disclosure of the amount in the return of income. The issue of validity of reopening the assessment hinged on whether the alleged undisclosed income was actually disclosed by the assessee, a factual aspect that was not adequately addressed in the previous proceedings. The recall was deemed necessary to ensure a comprehensive consideration of all relevant facts and to rectify the oversight in the earlier order.