2017 (7) TMI 906 - AT - Income Tax

Reopening of assessment - Addition u/s 68 - unexplained cash credit in the form of share capital - Held that - No new information has been flown to the Assessing Officer after the order passed u/s 143(3) dated 6.11.2009 i.e. original assessment. He brought to the notice at page P.B. 7 the reasons recorded and the statement of the Mr. Tarun Goyal recorded on 2.8.2009 much before the date of the original assessment is a matter of record at P.B. 2 and 3. The first provision of the section 147 shall come into play when there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the present case as pointed out earlier the Assessing Officer and the ld. DR has not on record any new fact while recording the reasons u/s 147/148 of the Act. Therefore there is change of opinion. Moreover during the enquiries made in response to u/s 133(6) which was complied with there is no observation on the said compliance by the assessee and therefore in the circumstances and facts of the case the notice issued is lacking the reasons to believe and assessee having disclosed all the material facts in the original assessment and no new facts have been recorded in the reassessment proceedings - Decided in favour of assessee.

Summary

Issues:
1. Validity of deletion of addition u/s 68 for unexplained cash credit in the form of share capital.
2. Validity of quashing the reassessment order passed u/s 147.

Analysis:

Issue 1: Validity of deletion of addition u/s 68 for unexplained cash credit in the form of share capital:
The appeal by the revenue challenged the deletion of the addition under section 68 amounting to Rs. 48,00,000 made by the Assessing Officer (AO) on account of unexplained cash credit in the form of share capital. The assessee company had received share application money from two companies, and the identity, creditworthiness, and genuineness of the share capital were examined and accepted during the original assessment under section 143(3). The notice issued under section 147 was quashed by the ld. CIT (A) on the grounds that the AO's action was a mere change of opinion without any new material facts. The ld. CIT (A) found that the reasons for reopening the assessment were not valid as the Assessing Officer was aware of the share application money received and the information from the investigation wing during the original assessment proceedings. The ld. CIT (A) concluded that the reassessment order was not sustainable and quashed it based on various legal precedents and the lack of fresh evidence to justify the reassessment.

Issue 2: Validity of quashing the reassessment order passed u/s 147:
The revenue contended that the statement given by a certain individual contained names that included the assessee company, providing sufficient material to justify the reassessment. However, the ld. CIT (A) held that the action of the Assessing Officer was a mere change of opinion and not based on any new material facts. The ld. CIT (A) emphasized that the reasons recorded for reopening the assessment did not indicate any material fact that had not been fully and truly disclosed by the assessee during the original assessment. The ld. CIT (A) cited legal precedents and held that the reassessment under section 147 was not valid. The Tribunal concurred with the ld. CIT (A)'s decision, dismissing all grounds of the revenue and upholding the quashing of the reassessment order.

In conclusion, the Tribunal dismissed the revenue's appeal, affirming the quashing of the reassessment order passed under section 147 by the ld. CIT (A) based on the lack of new material facts and the action being deemed a change of opinion without valid grounds for reassessment.