2021 (1) TMI 1018 - AT - Income Tax

Reopening of assessment u/s 147 - assessment of the assessee was reopened after the expiry of 4 years - HELD THAT - In the instant case all the material fact has already been disclosed by assessee. Moreover, after the issuance of notice dated 30.12.2012, the assessee has furnished the reply also and after the satisfaction the matter of controversy has been decided. Since the assessee was not failure to for the disclosure of all the material facts necessary for assessment, therefore, the reopening is also bad in view of the decision in the case of (i) Phool Chand Bajrang Lal Vs. ITO 1993 (7) TMI 1 - SUPREME COURT (ii) ALA Firm Vs. CIT 1991 (2) TMI 1 - SUPREME COURT (iii) Indian and Eastern Newspaper Society Vs. CIT 1979 (8) TMI 1 - SUPREME COURT ITO Vs. Lakhmani Mewal Das 1976 (3) TMI 1 - SUPREME COURT . On appraisal of the above said finding, it is apparent that the assessment could only be reopened on account of disclosure of new matter of knowledge of fresh facts which were not present at the time of original assessment. It may constitute reason to believe that the income of escaped assessment within the meaning of Section 147 We are of the view that the notice u/s. 147/148 of the Act is wrong against law and facts, hence, is hereby ordered to be set aside. Accordingly, we decide these issues in favour of the assessee

Summary

Issues:
1. Reopening of assessment under sections 147/148 of the Income Tax Act.
2. Addition of deemed income on security deposit for the assessment year 2010-11.

Issue 1:
The assessee challenged the reopening of the assessment under sections 147/148 of the Income Tax Act. The assessment was initially completed under section 143(3) of the Act, determining the total income. The Assessing Officer (AO) issued a notice to the assessee, seeking various details related to the property and income. The AO later reopened the assessment based on discrepancies in rent income and a high deposit amount received by the assessee. However, the Tribunal noted that the AO had already examined these aspects during the original assessment. The Tribunal held that it is impermissible for the revenue to reopen a case on the same issue previously examined. Citing legal precedents, the Tribunal ruled that the AO's change of opinion was not allowed. Additionally, as the reopening occurred after four years, and all material facts were disclosed by the assessee, the Tribunal found the reopening invalid. Consequently, the notice under sections 147/148 was set aside, and the issues were decided in favor of the assessee against the revenue.

Issue 2:
The second issue involved the addition of deemed income on a security deposit for the assessment year 2010-11. The AO had added a sum as estimated deemed income on the security deposit for 12 months, which the assessee contested. The Tribunal reevaluated the situation and found that the income from the property was reworked based on the security deposit and market rent. The total income of the assessee was assessed accordingly. As the Tribunal had already ruled in favor of the assessee on the first issue of reopening the assessment, it was concluded that deciding the issues on merits would be academic in nature. Therefore, the Tribunal allowed the appeal of the assessee related to this issue as well, in line with the decision on the first issue. The appeals filed by the assessee were ultimately allowed by the Tribunal.

In summary, the Tribunal found in favor of the assessee on both issues, ruling against the revenue's actions regarding the reopening of the assessment and the addition of deemed income on the security deposit for the assessment year 2010-11.