2016 (5) TMI 571 - AT - Income Tax

Reopening of assessment - receipt of on-money - Held that - When no evidence is available for receipt of on-money during assessment year 2008-09, extending the analogy to other assessment years for re-assessment proceedings may not be justified. As rightly found by the CIT(Appeals), there is no base for the reasons to believe that the income otherwise chargeable to tax has escaped assessment. In the absence of any material to suggest that the income chargeable to tax escaped assessment, this Tribunal is of the considered opinion that the Assessing Officer cannot believe that the income chargeable to tax escaped assessment. Since the statement recorded from Shri A.B.S. Sanjay does not indicate any receipt of on-money during assessment year 2008-09 and no material is available on record for assessment years 2007-08 and 2009-10, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that there is no justification in reopening the assessments. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided in favour of assessee.

Issues:
- Reopening of assessments based on incriminating material found during search operation
- Addition of on-money received by the assessee
- Validity of reopening assessments without fresh material

Reopening of assessments based on incriminating material found during search operation:
The case involved appeals by the Revenue against a common order passed by the Commissioner of Income Tax (Appeals) for the assessment years 2007-08, 2008-09, and 2009-10. The appeals and cross-objections were heard together. The Ld. Departmental Representative argued that the Assessing Officer framed assessments based on material found during a search operation in the case of another individual, which was later deleted by the CIT(Appeals). The Revenue contended that the Assessing Officer had the right to reopen the assessment under Section 148 of the Income-tax Act as on-money receipts were not examined in the regular assessment. However, the Ld. counsel for the assessee argued that there was no corroborative evidence to prove on-money receipts and that reopening assessments without fresh material would amount to a change of opinion. The Tribunal found that the brochure found during the search operation was not incriminating material, leading to the deletion of additions made by the Assessing Officer.

Addition of on-money received by the assessee:
The Assessing Officer made additions in the reassessment proceedings for the assessment years 2008-09 and 2009-10 based on on-money receipts. The Revenue argued that the Assessing Officer rightfully reopened the assessment as on-money receipts were not examined in the regular assessment. However, the CIT(Appeals) found the assumption of jurisdiction for reopening assessments under Section 147 to be illegal and deleted the additions. The Ld. counsel for the assessee contended that there was no evidence to suggest on-money receipts and that reopening assessments without fresh material was unjustified. The Tribunal examined the reasons recorded by the Assessing Officer for reopening the assessment and found no evidence to support on-money receipts, leading to the confirmation of the CIT(Appeals) decision to delete the additions.

Validity of reopening assessments without fresh material:
The Ld. counsel for the assessee argued that reopening assessments without fresh material would amount to a change of opinion and that there was no failure on the part of the assessee to disclose relevant material. The Tribunal examined the reasons recorded by the Assessing Officer for reopening the assessment, which included a sworn statement indicating on-money payments. However, upon further examination, it was found that no evidence supported on-money receipts, leading to the conclusion that the Assessing Officer's belief of income escaping assessment was unfounded. The Tribunal upheld the CIT(Appeals) decision to delete the additions made by the Assessing Officer, dismissing both the Revenue's appeals and the assessee's cross-objections.

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