2021 (6) TMI 812 - AT - Income Tax

Reopening of assessment u/s 147 - assessee had shown fixed assets but he had not offered any income from the said property except agriculture income - HELD THAT - As decided in M/S FATEH SOFTECH PVT. LTD. VERSUS INCOME TAX OFFICER, WARD-1 (4) 2021 (5) TMI 957 - ITAT CHANDIGARH merely possession of a fixed asset does not mean that the assessee might have earned any income from the said asset which would have escaped assessment. Admittedly the assessee owns agricultural land where upon certain construction has been made by the assessee. It has been used for its own purposes. The reasons recorded by the Assessing Officer do not disclose that the assessee has used any of his assets for any business or rental purposes. The formation of belief by the AO in this case regarding the escapement of income of the assessee view is based on just assumptions and presumptions and there was no reliable material available with the AO to form the belief that the income of the assessee had escaped assessment. In this view, reopening of the assessment in this case, in my view is bad in law and the same is therefore quashed. Appeal of the assessee is allowed

Summary

Issues:
Challenge to correctness of order dated 31.10.2019 of CIT(A)-I Chandigarh for 2008-09 assessment year.

Analysis:
The appeal challenges the order of CIT(A)-I Chandigarh for the 2008-09 assessment year. During the hearing, parties focused on ground No. 2, as the jurisdictional challenge raised by the assessee was resolved in their favor. The appellant had requested adjournment citing a similar case pending before ITAT, which was now concluded. The appeal proceeded after the availability of the relevant order.

The appellant's representative referred to the reasons recorded in the case and highlighted that the issue was identical to a connected case, where the ITAT had quashed the assumption of jurisdiction. The Senior DR acknowledged that the reasons were considered by ITAT in another case, agreeing that the jurisdiction assumption was quashed. The case was then considered based on the material on record.

The reasons for re-opening the assessment were based on information received regarding alleged evasion of rental income. The ITAT had previously quashed a similar re-opening in a connected case, emphasizing that mere possession of fixed assets did not imply income evasion. As there were no changes in facts or arguments, the ITAT allowed the appellant's second ground, leading to the quashing of the assessment order.

Although the appellant sought to argue on merits, the assessment being quashed rendered the discussion redundant. Consequently, the appellant's second ground was allowed. The order was pronounced during a virtual hearing, and the appeal was allowed to the extent mentioned.

In conclusion, the ITAT Chandigarh allowed the appellant's appeal concerning the correctness of the CIT(A) order for the 2008-09 assessment year, specifically addressing the jurisdictional challenge and the quashing of the assessment order based on the ITAT's previous decision in a connected case.