2021 (1) TMI 729 - AT - Income Tax

Reopening of assessment u/s 147 - proceedings beyond 4 years - HELD THAT - As held in the case of PCIT versus Light Carts (P) Ltd 2017 (9) TMI 46 - ALLAHABAD HIGH COURT that where assessee disclosed all the material facts necessary for assessment, AO could not reopen assessment after expiry of 4 years from the end of relevant year merely on the basis of information supplied by investigation wing that certain income earned by assessee had escaped assessment. We are inclined to quash the reassessment order based on the fact that it is reopened beyond 4 years without bringing on record any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The order passed by Ld. CIT(A) that the assessment was reopened within 4 years and he proceeded to adjudicate the issue on reopening of the assessment in the above said wrong notion and sustained the addition made by the assessing officer. It is brought on record clearly that the reassessment was initiated beyond 4 years, therefore we restrict ourselves to adjudicate on jurisdiction issue and not going into merits of the case - Decided in favour of assessee.

Issues Involved:
1. Validity of Reassessment after Four Years
2. Addition of 15% of Alleged Accommodation Bills

Detailed Analysis:

1. Validity of Reassessment after Four Years:

The assessee challenged the reopening of assessment, arguing that it was conducted beyond the permissible four-year period. The original assessment under section 143(3) was completed on 30.10.2009. The reassessment was initiated by issuing a notice under section 148 on 08.04.2014, which is beyond the four-year limit. The assessee contended that there was no failure on their part to disclose fully and truly all material facts necessary for assessment. The Ld. CIT(A) erroneously adjudicated the issue under the wrong notion that the reassessment was initiated within four years. The Tribunal noted that the reasons for reopening did not disclose any failure on the part of the assessee to disclose material facts. The Tribunal cited the case of Hindustan Lever Ltd Vs R.B. Wadkar, emphasizing that reasons for reopening must be clear and unambiguous, and must disclose the failure of the assessee to fully and truly disclose material facts. The Tribunal concluded that the reassessment was invalid as it was initiated beyond four years without any failure on the part of the assessee to disclose material facts. Consequently, the reassessment order was quashed.

2. Addition of 15% of Alleged Accommodation Bills:

The AO made an addition of 15% of the alleged bogus purchases, amounting to ?13,94,243/-, based on information from the Investigation Wing and Sales Tax Department. The assessee argued that all purchases were genuine and supported by documentary evidence. The Ld. CIT(A) upheld the addition, stating that the assessee failed to produce the parties for verification and did not satisfactorily substantiate the genuineness of the purchases. The AO relied on the decision of the Hon'ble Gujarat High Court in the case of Simit P Seth. The Tribunal, however, did not delve into the merits of this issue, as it had already quashed the reassessment order on jurisdictional grounds. Therefore, the grounds related to the addition of 15% of alleged accommodation bills were not adjudicated.

Conclusion:

The Tribunal allowed the appeal of the assessee partly, primarily on the ground that the reassessment was invalid as it was initiated beyond the permissible four-year period without establishing any failure on the part of the assessee to disclose material facts. The other grounds related to the addition of 15% of alleged accommodation bills were not adjudicated. The order was pronounced in the open court on 08/12/2020.

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