2017 (6) TMI 124 - AT - Income Tax

Revision u/s 263 - unexplained investments - reopening of assessment - Held that - In the instant case, the Assessing Officer has not pointed out how the assessee failed to disclose fully and truly all material facts related to the assessment. In fact, the assessee only submitted details of investment in 8,32,500 shares in first round of reassessment proceedings. We note that in reassessment proceeding the Assessing Officer has mentioned that no information was provided by the assessee and therefore made the addition. However, in appellate proceeding before the Ld. CIT(A), a remand report was called from the Assessing Officer but in the said remand report also, no evidence as regard to the market value of the shares or any evidence of unaccounted money invested by the assessee was brought on record by the Assessing Officer. No material has been brought by the Revenue to rebut the above factual finding of the ld. CIT(A). In such circumstances, we are of considered opinion that in absence of any material to indicate that any unexplained investment has been made by the assessee in purchase of shares, no addition could have been made in the hands of the assessee. We are of the view that the finding of the Ld. CIT(A) on the issue in dispute is comprehensive and well reasoned and we are not inclined to interfere in the same Further, the Ld. CIT-A also observed that the Assessing Officer has not disposed off the objection of the assessee to the reasons recorded in accordance to the decision in GKN Driveshaft (India) Limited (2002 (11) TMI 7 - SUPREME Court ). The Revenue has not brought before us any material to contradict the factual findings of ld. CIT(A). - Decided against revenue

Summary

Issues Involved:

1. Validity of reopening the case under sections 147/148.
2. Deletion of addition of ?70,77,000 as unexplained investment treated as deemed income under section 69B.

Issue-wise Detailed Analysis:

1. Validity of Reopening the Case under Sections 147/148:

The Revenue challenged the quashing of the reassessment proceeding by the CIT(A). The CIT(A) found that the Assessing Officer (AO) had not specifically mentioned discrepancies and had ignored that the assessment for AY 2001-02 had already been completed under sections 148/143(3). The AO had previously examined the issue relating to the shares held by the assessee and had taken the statement of the broker. The CIT(A) noted that there was no additional information or fresh facts to justify reopening the assessment, indicating it was merely a change of opinion. Furthermore, the AO did not dispose of the objections raised by the assessee regarding the reasons for reopening, violating the procedure established by the Supreme Court in GKN Driveshafts (India) Ltd. The Tribunal upheld the CIT(A)'s findings, stating that the AO had not pointed out any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, as required by the proviso to section 147. The Tribunal dismissed the Revenue's ground, concluding that the reassessment proceeding was not justified.

2. Deletion of Addition of ?70,77,000 as Unexplained Investment Treated as Deemed Income under Section 69B:

The Revenue also challenged the deletion of the addition of ?70,77,000 by the CIT(A). The AO had made the addition on the ground that the assessee did not provide details of the purchase of 8,32,500 shares for ?12.48 lakhs. The AO assumed the value of the shares should be ?10 per share, concluding that the investment should have been ?83,25,000, thus treating ?70,77,000 as unexplained investment under section 69B. The CIT(A) observed that the issue had been examined in detail in the earlier assessment, where the AO had accepted the assessee's contentions after examining the broker's statement. The CIT(A) noted that no new facts or material were available to justify the addition and that the AO had not provided any evidence of unaccounted money invested by the assessee. The Tribunal upheld the CIT(A)'s findings, stating that in the absence of any material evidence indicating unexplained investment, the addition could not be sustained. The Tribunal dismissed the Revenue's ground, agreeing with the CIT(A) that the addition was not justified.

Conclusion:

The appeal of the Revenue was dismissed on both grounds. The Tribunal upheld the CIT(A)'s decision to quash the reassessment proceeding and delete the addition of ?70,77,000 as unexplained investment. The decision was pronounced in the open court on 17th May 2017.