2017 (11) TMI 384 - AT - Income Tax

Initiation of re-assessment proceedings - non payment in respect of Government duty covered under section 43B - Held that - A.O. passed the original assessment order under section 143(3) and did not make any addition under section 43B of the I.T. Act. Later on A.O. found certain mistakes in the original assessment order dated 22nd December 2011 and one of the mistake was that no proof of payment in respect of Government duty covered under section 43B have been filed which was to be added under section 154 of I.T. Act to the income of the assessee. The assessee filed reply before A.O. in the rectification proceedings under section 154 of the Act supported by copies of the challan to show that payment in question have been made to the department. It therefore appears that A.O. was satisfied with the explanation of assessee and that is why he did not make any amendment in the original assessment order dated 22nd December 2011 and proposed action under section 154 would be deemed to have been dropped under section 154. It therefore shows that A.O. accepted the explanation of assessee that assessee made proper payment under section 43B of the I.T. Act. There were no other material available on record to show that assessee has not made any payment covered under section 43B of the I.T. Act. On the face of the material available on record it was not proper for the A.O. to initiate the re-assessment proceedings with regard to the same fact that assessee has not made payment in respect of Government duty covered under section 43B - Decided in favour of assessee.

Summary

Issues:
Initiation of re-assessment proceedings under section 147 of the I.T. Act, additions challenged by the assessee, validity of reasons recorded for reopening of the assessment.

Initiation of Re-assessment Proceedings:
The appeal challenged re-assessment proceedings under section 147 of the I.T. Act. The assessee contended that the initiation was unjustified as rectification proceedings on the same matter were pending. The additional ground on this issue was admitted for hearing. The reasons for reopening the case were examined, and it was found that the A.O. did not make any addition for government duty under section 43B in the original assessment order. The A.O. had issued a notice to rectify this, which the assessee responded to with evidence of payment. The initiation of re-assessment proceedings was deemed unjustified as the A.O. had no new material and the reasons for reopening were incorrect and non-existent. Citing legal precedents, the initiation of re-assessment proceedings was held to be without jurisdiction and quashed.

Challenged Additions:
The assessee challenged the additions made by the A.O., including &8377; 6,50,000 and &8377; 4,19,585. The A.O. had made these additions based on expenditure and unexplained bank deposits. The assessee argued against these additions before the Ld. CIT(A), but the appeal was dismissed with enhancement. However, due to the quashing of the re-assessment proceedings, these additions were left for academic discussion only, and all additions were deemed deleted.

Validity of Reasons for Reopening:
The validity of the reasons recorded for reopening the assessment was a crucial issue. The A.O. had initiated re-assessment proceedings based on alleged non-payment of government duty under section 43B. However, it was found that the A.O. had not made any such addition in the original assessment order and had asked for rectification, which the assessee complied with by providing evidence of payment. As the A.O. had no new material and the reasons for reopening were deemed incorrect and non-existent, the initiation of re-assessment proceedings was held to be without jurisdiction and quashed. The decision was supported by legal precedents and led to the deletion of all additions made by the A.O.

This detailed analysis of the judgment highlights the key issues of the initiation of re-assessment proceedings, challenged additions, and the validity of reasons for reopening the assessment. The decision ultimately quashed the re-assessment proceedings and deleted all additions, emphasizing the importance of proper justification and legal compliance in such matters.