2017 (12) TMI 64 - HC - Income Tax

Reopening of assessment - Addition u/s 68 - reasons to believe - Held that - In this case, the Assessing Officer (A.O.) appears to have completely ignored the earlier re-assessment order framed under Section 148/143(3) on 31.12.2007. The first re-assessment order noticed all the relevant facts and accepted the net income at ₹ 1,03,890/- . The assessment made in the course of assessment proceeding, in the present case, does not refer to any subsequent material other than the Directorate of Enforcement s letter of 28.03.2006; instead the A.O. appears to have just made a Chart as the basis even while acknowledging that the earlier re-assessment proceedings were concluded on 31.12.2007, clearly stated that perusal in assessment records reveals that the remittances received are not considered in the return of income filed by the Assessee and in the course of the assessment proceedings for the Assessment Years 2003-2004 & 2006-2007 . That clearly shows that the A.O. ignored that the material, which led the Revenue to re-open the Assessment, in the first instance, was the same that he sought to resuscitate in order to make substantial additions. - Decide against revenue.

Summary

Issues:
1. Rejection of appeal by ITAT due to lower tax effect.
2. Addition under Section 68 of the Income Tax Act.
3. Information received from Enforcement Directorate regarding possible disallowance.
4. Assessee being a non-resident and remittances received from M/s. New heaven Nominees Limited.
5. Ignoring earlier reassessment order and discrepancies in assessment proceedings.

Analysis:
1. The Revenue's appeal was rejected by the Income Tax Appellate Tribunal (ITAT) citing the tax effect being lower than the stipulated amount in accordance with the prevailing Circular. Similar assessments involving Mr. Arvind Khanna and Mr. Navin Khanna were remitted for fresh consideration to the Commissioner of Income Tax (Appeals).

2. The Revenue contended that a sum of ?33,51,269/- should be added under Section 68 of the Income Tax Act based on the facts and circumstances of the case.

3. The Revenue received information from the Enforcement Directorate regarding possible disallowance under Section 68, as per the notice issued under Section 148 of the Act.

4. The Assessee, represented by counsel, argued that they were a non-resident and the remittances were received from M/s. New heaven Nominees Limited.

5. The Assessing Officer (A.O.) seemed to have disregarded the earlier reassessment order framed under Section 148/143(3) on 31.12.2007. The A.O. appeared to have based the assessment on a chart without considering subsequent material, despite acknowledging the earlier reassessment proceedings. The Court found that no substantial question of law arose and subsequently dismissed the appeal.