2020 (1) TMI 864 - AT - Income Tax

Reopening of the assessment u/s 147 - validity of reasons to believe - notice after four years - HELD THAT - No failure on the part of the assessee to disclose all primary facts. The A.O. has not specified as to in which manner there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under appeal. Therefore proviso to Section 147 of the I.T. Act would apply in favour of the assessee. In the present case the notice under section 148 have been issued after 04 years and no new and tangible material has been brought on record at the time of reopening of the assessment and the A.O. wanted to correct the error in the original assessment order passed by the A.O. while initiating the re-assessment proceedings we are of the view that reopening of the assessment is not valid in the facts and circumstances of the case. Considering the totality of the facts and circumstances of the case we do not find any justification to sustain the reopening of the assessment. - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment under section 147 of the I.T. Act, 1961 for the A.Y. 2005-2006.

Detailed Analysis:

1. Reopening of Assessment:
The appeal challenged the reopening of the assessment under section 147 of the I.T. Act, 1961 for the A.Y. 2005-2006. The original return was filed by the assessee declaring a loss, which was later assessed by the A.O. The notice for reopening was issued based on discrepancies in the deductions claimed by the assessee. The A.O. made additions on account of loss on sale of fixed assets and foreign exchange loss. The assessee challenged the reopening and the additions before the Ld. CIT(A).

2. Arguments by Assessee:
The assessee contended that there was no fresh tangible material brought on record for the reopening of the assessment. It was argued that there was no failure on the part of the assessee to disclose all material facts. The assessee relied on various decisions to support the contention that the proviso to Section 147 should apply in their favor.

3. Arguments by Revenue:
The Revenue argued that the reopening was justified based on factual mistakes pointed out in the audit report, which the assessee had ultimately agreed to before the A.O. Various decisions were cited to support the justification for the reopening.

4. Judgment and Reasoning:
The Tribunal analyzed the reasons recorded for the reopening of the assessment and found that no new factual material was discovered during the reassessment proceedings. The A.O. had based the reopening on discrepancies already present in the records. The Tribunal referred to legal precedents emphasizing that the assessee only needs to disclose primary facts during the original assessment. Since there was no failure on the part of the assessee to disclose all primary facts, the proviso to Section 147 was deemed applicable in favor of the assessee. The Tribunal concluded that the reopening of the assessment was invalid and set aside the Orders of the authorities below, quashing the reopening of the assessment.

5. Conclusion:
The appeal of the Assessee was allowed, and the Tribunal pronounced the order in the open court, holding that the reopening of the assessment was invalid and bad in law. The decision was based on the lack of new tangible material for the reopening and the absence of failure on the part of the assessee to disclose all primary facts during the original assessment.

This detailed analysis provides a comprehensive overview of the judgment, focusing on the issues related to the reopening of the assessment under section 147 of the I.T. Act, 1961 for the A.Y. 2005-2006.