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2019 (4) TMI 777 - AT - Income TaxReopening of assessment u/s 148 - review v/s reopening - original assessment was completed u/s 143(3) - Addition u/s 68 as unexplained cash credit - HELD THAT - The undisputed position that emerges is that AY under appeal is AY 2009-10 and the original assessment was completed u/s 143(3). The reassessment proceedings have been initiated vide issuance of notice u/s 148 dated 27/03/2014 which shows that the reassessment have been triggered within a period of four years from the end of the relevant assessment year and therefore, the rigors of first proviso to Section 147 viz. failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment, were not applicable to the fact of the present case. The only requirement to be fulfilled in such a case was that AO had reasons to believe that certain income escaped assessment in the hands of the assessee. At the same time, AO is not empowered to review the already concluded issues u/s 143(3) and review in the garb of reassessment was not permissible under the law. Further, mere reasons to suspect could not substitute reasons to believe. - Decided in favour of assessee.
Issues Involved:
1. Validity of reassessment proceedings under Section 147/148 of the Income Tax Act, 1961. 2. Justification of the additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961. 3. Whether the CIT(A) was justified in deleting the additions made by the AO. Issue-wise Detailed Analysis: 1. Validity of Reassessment Proceedings: The assessee challenged the reassessment proceedings on the grounds that they were initiated based on a change of opinion and borrowed satisfaction from the Investigation Wing without any independent application of mind by the AO. The original assessment was completed under Section 143(3) on 30/12/2011, and the reassessment was initiated within four years, triggered by a notice under Section 148 dated 27/03/2014. The reassessment was based on the receipt of share premium which the AO believed was not justified and thus considered it as the assessee’s undisclosed income. The Tribunal observed that the AO did not have any new tangible material to initiate the reassessment proceedings. The AO’s reasons for reopening were based on the information received from the Investigation Wing, which stated that the share premium was ?46,800,000/-. The Tribunal noted that the AO had already examined the issue of share premium during the original assessment proceedings, where the assessee had provided all necessary details and documents to substantiate the transactions. The Tribunal emphasized that the AO could not review the already concluded issues under the garb of reassessment, and the reassessment proceedings initiated merely on a change of opinion were impermissible under law. The Tribunal relied on the legal proposition set by the Hon’ble Supreme Court in CIT Vs. Kelvinator of India Ltd. [320 ITR 561], which stated that reassessment must be based on tangible material and not on a mere change of opinion. 2. Justification of Additions under Section 68: During the reassessment proceedings, the AO added ?520 Lacs to the assessee’s income under Section 68 as unexplained cash credit, concluding that the assessee failed to justify the high premium of ?900/- per share and prove the creditworthiness of the investor company, Orbit Lifeline Private Limited. The AO alleged that the investor company was merely an accommodation entry provider with no genuine business. The CIT(A) deleted the additions on merits, concluding that the assessee had discharged the onus of proving the identity, creditworthiness, and genuineness of the transactions. The CIT(A) relied on the judgments of the Tribunal in Green Infra Ltd. Vs ITO [159 TTJ 728] and the Hon’ble Supreme Court in CIT Vs. Lovely Exports P. Ltd. [216 CTR 195], which supported the assessee’s case. 3. Deletion of Additions by CIT(A): The revenue challenged the deletion of the additions by the CIT(A) on the grounds that the CIT(A) erred in holding that the assessee proved the identity, creditworthiness, and genuineness of the transactions merely by submitting PAN, acknowledgment of income-tax returns, bank statements, and the mode of payment. The revenue argued that the CIT(A) ignored the facts brought out by the AO, which indicated that the investor company had no fixed assets or creditworthiness and acted as a conduit. The Tribunal, after examining the rival submissions and the material on record, concluded that the reassessment proceedings suffered from a jurisdictional defect. The Tribunal noted that the AO had already examined the issue of share premium during the original assessment proceedings and had accepted the assessee’s explanations and documents. Therefore, the reassessment proceedings were quashed on legal grounds. Since the reassessment proceedings were quashed, the Tribunal did not delve into the merits of the additions made by the AO, rendering the revenue’s appeal infructuous. Conclusion: The Tribunal allowed the assessee’s appeal, quashing the reassessment proceedings on legal grounds, and dismissed the revenue’s appeal as infructuous. The order was pronounced in the open court on 10th April, 2019.
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