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2021 (2) TMI 1272 - AT - Income TaxReopening of assessment u/s 147 - disallowance u/s 43B towards PF, ESI and TDS - HELD THAT - AO has failed to record the reasons to the satisfaction of the section 147, under which, the assessment was reopened. Further, as contended by the ld. AR that there is neither any new information available with the AO nor any new tangible material in hand other than the information already existing in original assessment and further, there was no failure on the part of the appellant company to fully and truly disclose the material facts necessary for the assessment.. DR has filed a paper book containing pages 1 to 26, in which, copy of reasons recorded has been placed at pages 1 to 3 and the approval from Pr. CIT is at page 4. We observe that the reasons recorded by the AO, Ward - 1 (3), whereas, assessment was framed by ITO, Ward 1(2), Hyderabad. From the reasons recorded, we observe that nowhere it is mentioned that there was any incumbency. In the light of these observations, we are of the view that the AO, who has framed the assessment order has not applied his mind properly before reopening the case of the assessee u/s 147 - no sufficient and impeachable reason for reopening the assessment u/s 147 of the Act. Therefore, in the facts and circumstances of the case the issuance of notice u/s 148 and consequently passing of assessment u/s 147 of the Act is unsustainable. Accordingly, we quash the assessment order passed by the AO u/s 143(3) read with section 147 of the Act. Since the assessment itself is quashed, additions made on such assessment do not survive. Decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal before ITAT. 2. Reopening of assessment under section 147 of the Income Tax Act. 3. Disallowance under section 43B towards PF, ESI, and TDS. Issue-wise Detailed Analysis: 1. Delay in Filing the Appeal Before ITAT: The appeal filed by the Assessee suffered from a 20-day delay. The Assessee filed a petition for condonation along with an affidavit stating that the delay was due to the appeal papers being misplaced by one of its staff. The Tribunal relied on the case laws "Collector Land Acquisition Vs. Mst. Katiji & Ors, 1987 AIR 1353 (SC)" and "University of Delhi Vs. Union of India, Civil Appeal No. 9488 & 9489/2019 dated 17 December 2019" to condone the delay, holding that it was neither intentional nor deliberate but due to circumstances beyond the Assessee's control. 2. Reopening of Assessment Under Section 147: The Assessee raised grounds against the action of the AO in reopening the assessment under section 147 of the Act. The original assessment for AY 2012-13 was completed under section 143(3) on 30.03.2015. The AO noticed that the Assessee had deducted TDS, PF, and ESI but neither deposited them into the Government account nor issued TDS challans to the employees. The AO reopened the assessment by issuing a notice under section 148 on 22.03.2019, based on the remittances of PF, ESI, and TDS beyond the due date as per section 43B. The Assessee contended that the reopening was erroneous as it was based on information already available during the original assessment proceedings and lacked any new tangible material. The Tribunal referred to the provisions of section 147 and found that the AO failed to record the words "fully and truly" in the reasons for reopening, which is a crucial requirement. The Tribunal observed that there was no new information or tangible material, and the Assessee had fully and truly disclosed all material facts necessary for the assessment. Hence, the reopening of the assessment was deemed unsustainable. 3. Disallowance Under Section 43B Towards PF, ESI, and TDS: The AO disallowed amounts under the heads PF, ESI, and TDS under section 43B of the Act, stating that the Assessee did not deposit these amounts into the Government account within the stipulated time. The CIT(A) upheld the disallowances, noting that the Assessee failed to furnish evidence of payment before the due date of filing the return. The Assessee argued that the reopening of the assessment was beyond four years and lacked the necessary satisfaction of the AO regarding the escapement of income. The Tribunal found that the AO did not apply his mind properly before reopening the case and failed to record sufficient reasons for the same. Consequently, the Tribunal quashed the assessment order passed under section 143(3) read with section 147, rendering the disallowances unsustainable. Conclusion: The appeal of the Assessee was allowed. The Tribunal condoned the delay in filing the appeal, quashed the reopening of the assessment under section 147 due to lack of proper reasons and new tangible material, and consequently, the disallowances under section 43B did not survive.
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