2021 (8) TMI 1267 - AT - Income Tax

Reopening of assessment u/s 147 pursuant to the order of the ld. CIT u/s 264 - Unexplained expenditure - HELD THAT - In the case in hand, again pursuant to the order of the ld. CIT u/s 264 of the Act, notice u/s 148 of the Act was issued and served upon the assessee and reasons recorded for reopening the assessment are identical to the reasons recorded in the case of M/s Sam Portfolio Pvt Ltd 2020 (2) TMI 1142 - ITAT DELHI , though quantum may differ. On finding parity on the facts of the case in hand with the facts of the case of M/s Sam Portfolio Pvt Ltd supra , we have no hesitation in adopting the findings given by this Tribunal in the case of M/s Sam Portfolio Pvt Ltd supra considered view that the AO has wrongly assumed jurisdiction in framing the assessment order u/s 143(3) r.w.s 147.

Issues Involved:
1. Deletion of ?11,18,669/- added as unexplained expenditure.
2. Non-discussion of unexplained expenditure by CIT(A).
3. Deletion of ?6,94,52,809/- added as unexplained deposits.
4. Reliance on inadequate submissions by the assessee.
5. Lack of independent inquiry by CIT(A) and ignoring a High Court judgment.
6. Legality of the reassessment order framed under section 147/143(3).

Detailed Analysis:

1. Deletion of ?11,18,669/- Added as Unexplained Expenditure:
The Revenue contended that the CIT(A) erred in deleting the amount of ?11,18,669/- which was added by the AO as unexplained expenditure. The Tribunal found that the CIT(A) had not properly discussed the issue and facts of the unexplained expenditure raised by the AO. The Tribunal, therefore, scrutinized the records and found that the deletion was not substantiated adequately by the CIT(A).

2. Non-Discussion of Unexplained Expenditure by CIT(A):
The Revenue argued that the CIT(A) failed to discuss the issue of unexplained expenditure in detail. The Tribunal agreed with this contention, highlighting that the CIT(A) did not provide a thorough analysis or reasoning for deleting the addition of ?11,18,669/-. This lack of discussion was deemed an error in law and on facts.

3. Deletion of ?6,94,52,809/- Added as Unexplained Deposits:
The Revenue also challenged the deletion of ?6,94,52,809/- added as unexplained deposits. The Tribunal noted that the CIT(A) relied on submissions from the assessee which the AO had already rejected during the assessment stage. The Tribunal found that these submissions were inadequate, incomplete, and not genuine, thus supporting the AO's original addition.

4. Reliance on Inadequate Submissions by the Assessee:
The Tribunal observed that the CIT(A) relied on the assessee's submissions without conducting a proper independent inquiry. These submissions were already deemed unreliable by the AO. The Tribunal criticized the CIT(A) for accepting these submissions without further verification, which led to errors in the judgment.

5. Lack of Independent Inquiry by CIT(A) and Ignoring a High Court Judgment:
The Revenue argued that the CIT(A) neither conducted an independent inquiry nor directed further investigation as per subsection 4 of section 250 of the Income Tax Act. The Tribunal found merit in this argument, noting that the CIT(A) ignored the Delhi High Court’s judgment in the case of "The Commissioner of Income Tax - II Vs M/s Jansampark Advertising and Marketing (P) Ltd." This oversight was considered a significant error.

6. Legality of the Reassessment Order Framed Under Section 147/143(3):
The assessee's cross-objections challenged the reassessment order's legality, arguing that it was framed without proper jurisdiction and in violation of mandatory conditions under sections 147 to 151 of the Act. The Tribunal examined similar cases, including the case of M/s Sam Portfolio Pvt Ltd, where the assessment order was declared null and void due to incorrect jurisdiction assumption. The Tribunal found that the reasons for reopening the assessment in the current case were identical to those in the M/s Sam Portfolio Pvt Ltd case, which had already been annulled by the Tribunal. Consequently, the Tribunal concluded that the AO wrongly assumed jurisdiction, rendering the reassessment order invalid.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objections. The reassessment order was quashed on legal grounds, and the Tribunal did not delve into the merits of the case further. The judgment emphasized the importance of proper jurisdiction and adherence to legal procedures in reassessment cases. The order was pronounced in the open court on 09.08.2021 in the presence of both parties' representatives.

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