2018 (9) TMI 1536 - AT - Income Tax

Reopening of assessment - nondisclosure of busniss income - Held that - Reopening of the assessment is valid for simple reason that Assessee has not disclosed the entire business of M/s G.P Infotainment in the return of income as admitted before Ld. CIT(A). Since there is a failure on the part of Assessee in showing the transactions pertaining to the advertisement business, I am of the opinion that A.O has satisfied the conditions prescribed under Sec. 147 of the IT Act, particularly, the proviso to Sec. 147 - contentions on reopening of assessment by assessee and the grounds pertaining to this are rejected. TDS claimed not disclosed in return filed - contention that Assessee has received an amount towards advertisement and has paid the same to Zee News Ltd. - Held that - As in support, Assessee has filed the Profit and Loss account in the name of the M/s G.P Infotainment supported by various ledger copies, bank statements and invoices from Zee News Ltd., This information even though has been furnished before the CIT(A), the same were not subjected to verification by the A.O - entire receipt and expenditure as claimed by Assessee require proper verification by A.O. A.O is directed to examine the receipts and payments to Zee News and correlate the payments with the business activity and, if so found correct, allow the expenditure to the extent of the receipt, as the loss if any cannot be allowed in reopened assessment as the same was not claimed.

Summary

Issues:
Reopening of assessment after four years based on undisclosed income and TDS claim.
Disallowance of expenditure and addition of undisclosed income in reassessment.

Analysis:
The appeal pertains to the reopening of the assessment by the Assessing Officer (A.O) after four years based on undisclosed income and the disallowance of expenditure resulting in the addition of undisclosed income. The Assessee, an individual engaged in business activities, filed a return of income admitting a total income of ?94,470, which was later assessed at ?12,49,470. The A.O initiated proceedings under section 147 of the IT Act after noting an unreported TDS claim of ?9,45,000 received from M/s Marble Estate (India) Pvt. Ltd. The Assessee contested the reopening and the addition of the undisclosed income before the Ld. CIT(A), arguing that the amount was received for advertisement services provided by the proprietary concern of M/s G.P Infotainment to Zee News Ltd., resulting in a loss. However, the Ld. CIT(A) upheld the A.O's decision, stating that since the amount was not shown in the accounts, the expenditure was also not offered, confirming the addition of the undisclosed income.

Regarding the reopening of the assessment, the Ld. Counsel argued that since the TDS amount was reflected in the 26AS form and the assessment was completed under section 143(3) of the IT Act, the conditions for reopening after four years were not met as there was no failure to disclose information. However, the tribunal found that the Assessee did not disclose the entire business activity of M/s G.P Infotainment, justifying the A.O's actions under section 147 of the IT Act. The tribunal rejected the Assessee's contentions on the reopening of the assessment.

On the issue of the undisclosed income, the tribunal directed the A.O to verify the receipts and payments related to the advertisement services provided by the Assessee to Zee News Ltd. The tribunal emphasized the need for proper verification of the claimed expenditure and directed the A.O to examine the receipts and payments to ensure accuracy. The tribunal allowed the grounds for statistical purposes and partially allowed the appeal filed by the Assessee, subject to the specified observations.