2019 (4) TMI 1425 - AT - Income Tax

Time barring assessment - Period of limitation u/s 153 - applicability of Explanation-1 to sec. 153 - HELD THAT - The Assessing Officer admittedly set sec. 148 re-opening mechanism in motion in identical four notices issued on 16.02.2016 which stood served on the taxpayer on 19.02.2016 followed by the impugned re-assessments framed on 08.11.2017. Section 153 of the Act prescribes time limit for completion of assessment, re-assessment re-computation. Sub-section 2 thereof makes it clear that no order of assessment, re-assessment or re-computation shall be made u/s 147 after expiry of nine months from the end of the financial year in which sec. 148 notice stood served. There can hardly be any dispute about nine months from the end of the financial year of such section 148 notice service dated 19.02.2016; last upto 31.12.2016. The Revenue s submission extracted hereinabove are fair enough to this effect. I therefore observe that last date of framing of reassessments in all these assessment years was 31.12.2016. I conclude in this factual backdrop that all the impugned re-assessments in these four assessment years are clearly time barred since framed on 08.11.2017 going by the above statutory provision. I quash the impugned re-assessments since not framed within statutory limitation period. - Revenue appeals are dismissed

Summary

Issues Involved:
1. Whether the reassessments are barred by limitation under Section 153 of the Income Tax Act, 1961.
2. Validity of reopening of assessments under Section 147 of the Income Tax Act, 1961.
3. Merits of the additions made by the Assessing Officer under Section 68 of the Income Tax Act, 1961.

Detailed Analysis:

1. Whether the reassessments are barred by limitation under Section 153 of the Income Tax Act, 1961:
The primary issue is whether the reassessments for the assessment years 2008-09 to 2011-12 are time-barred. The Assessing Officer issued notices under Section 148 on 16.02.2016, which were served on 19.02.2016. According to Section 153(2), the reassessments should have been completed by 31.12.2016. However, the Revenue argued that the time limit should be extended due to a reference made to the Singapore Tax Authority on 25.11.2016, invoking Clause (x) of Explanation 1 to Section 153, which excludes the period of exchange of information under a DTAA. The Tribunal found that the period from 25.11.2016 to 08.08.2017 (when the information was received) should be excluded, resuming the limitation clock on 08.08.2017. Adding the remaining 36 days from the original limitation period, the deadline extended to 13.09.2017. The reassessments completed on 08.11.2017 were thus held to be time-barred.

2. Validity of reopening of assessments under Section 147 of the Income Tax Act, 1961:
The assessee challenged the legal validity of the reopening of assessments under Section 147. The CIT(A) upheld the reopening, stating that the Assessing Officer had sufficient material (HSBC Bank statements) to form a belief that income had escaped assessment. The Tribunal did not find merit in the assessee's argument that the reopening was based on surmises and conjectures, noting that the bank account was in the assessee's name and the information was authenticated by Swiss authorities. The Tribunal upheld the CIT(A)’s decision that the reopening was valid.

3. Merits of the additions made by the Assessing Officer under Section 68 of the Income Tax Act, 1961:
The CIT(A) deleted the additions made by the Assessing Officer, who had treated the deposits in the Swiss bank account as unexplained income under Section 68. The CIT(A) found that the deposits were from MSM Enterprises Pte Ltd, a Singapore company managed by Mr. Onn Sithawalla, who had admitted in an affidavit that the funds belonged to him and were for a joint venture with the assessee. The Tribunal noted that the Assessing Officer did not disprove the affidavit or the bank statements, which showed that the funds were remitted to another Singapore company, DMT, also managed by Mr. Sithawalla. The Tribunal concluded that the Assessing Officer failed to establish a link between the deposits and the assessee, and upheld the CIT(A)’s deletion of the additions.

Conclusion:
The Tribunal quashed the reassessments for being time-barred and upheld the CIT(A)’s decision on the merits, deleting the additions made under Section 68. The Revenue’s appeals were dismissed, and the assessee’s cross-objections were allowed.