2019 (8) TMI 460 - HC - Income Tax

Reopening of assessment u/s 147 - Addition u/s 68 - return processed u/s 143(1) - HELD THAT - During the course of assessment of AY 2013-2014, the AO noticed that the assessee had received loan of ₹ 10.27 crores (rounded off) from various firms and companies in AY 2012-13. Notices u/s 133(6) were issued to such firms also, which were returned back or were not responded to. The assessee also did not submit his reply in connection with the said loans of ₹ 10.27 crores. AO had verified the return of the income of the assessee for the said Assessment Year 2012-2013 and found that the assessee had disclosed having received unsecured loans of ₹ 10.27 crores. According to the AO, this would show that the assessee had received unexplained cash credit of ₹ 10.27 crores in terms of section 68. He, therefore, had reason to believe that the income chargeable to tax had escaped assessment. We do not find that the reasons recorded by the AO are such that it can be stated that the reasons lacked validity. The learned Counsel for the petitioner however submitted that the petitioner had made full disclosures about such unsecured loans and in any case, the assessment for the Assessment Year 2013-2014 is not yet final, the assessee had filed appeal which is pending. Neither of these two grounds permit us to quash the impugned notice of reassessment. Mere disclosure of receipt of unsecured loans would not be sufficient to avoid reassessment in case where the return was accepted without scrutiny . Further, the Assessing Officer has only referred to the assessment of the subsequent Assessment Year to demonstrate the nature of unsecured loans received by the assessee. There is no provision which would require him to await finality of such assessment before issuing the notice of reassessment. - Decided against assessee.

Summary

Issues:
1. Challenge to notice of reopening of assessment for AY 2012-2013.
2. Validity of reasons recorded for reopening assessment.
3. Disclosure of unsecured loans and pending appeal for AY 2013-2014.

Analysis:
1. The petition challenges a notice of reopening of assessment for the Assessment Year (AY) 2012-2013 issued by the Assessing Officer. The reasons for reopening included discrepancies in the business activities of the assessee company and unexplained cash credits in the form of unsecured loans totaling ?10.27 crores. The petitioner objected to the notice, which was rejected, leading to the filing of the petition.
2. The court noted that the return for AY 2012-2013 was previously accepted without scrutiny under section 143(1) of the Income Tax Act. Citing relevant judgments, the court established that if the Assessing Officer had tangible material to believe that income had escaped assessment, a reassessment notice could be issued. The reasons recorded by the Assessing Officer regarding unsecured loans and discrepancies in the assessment for AY 2013-2014 were considered valid, as they provided a basis for reopening the assessment.
3. The petitioner's argument that full disclosure of unsecured loans and a pending appeal for AY 2013-2014 should prevent reassessment was dismissed by the court. Merely disclosing the loans was not sufficient to prevent reassessment, especially when the return was accepted without scrutiny. The court emphasized that there was no requirement for the Assessing Officer to await the finality of the subsequent assessment before issuing a reassessment notice. Ultimately, the court dismissed the petition challenging the notice of reassessment.