2021 (6) TMI 974 - AT - Income Tax

Reopening of assessment u/s 147 - eligibility of reasons to believe - CIT(A) quashing the impugned reopening as not sustainable as this is an instance of Anti Corruption Bureau (ACB)'s proceedings which could see light of the day only after the specified period of four years from the end of the relevant assessment year thereby prompting the Assessing officer to take recourse to sec. 147/148 proceedings by recording the necessary reasons - HELD THAT - We see no merit in Revenue's instant arguments. It is evident from a perusal of the Assessing officer's reopening reasons recorded in assessee's case that he has nowhere recorded any reasons to believe that the assessee had not truly and fully disclosed details of her taxable income. The CIT(A) has already considered various judicial precedents whilst deciding the instant legal issue in assessee's favour. As decided in Hindustan Lever Ltd. Vs. R.B. Wadkar 2004 (2) TMI 41 - BOMBAY HIGH COURT it is needless to mention that the reopening reasons are required to be read as they were recorded by the Assessing officer. No substitution or deletion is permissible. No addition or deletion can be made on those reasons. No inference can be allowed to be drawn on the basis of the reasons not recorded. It is for the Assessing officer to disclose and open his mind through the reasons recorded by him, he has to speak through his reasons . And also that the reasons should be self-explanatory and should not keep the assessee guessing for reasons. Assessing officer's reopening reasons have failed in not only recording any such failure in light of sec. 147(1) 1st proviso on assessee's part but also he made it clear that the same were in order to verify the above facts . We thus uphold CIT(A)'s findings deciding the instant legal issue in assessee's favour. Loan(s) taken from Mr. T Nanda K and treated as unexplained u/s. 68 - necessary condition of filing Overseas remittance certificate for the corresponding money transfer from USA had not been complied with at the assessee's behest - HELD THAT - The same is found to be against the clinching facts recorded in CIT(A)'s order that the impugned sum had nowhere came from any foreign bank account but from a domestic account of the credit party only. The Revenue's sole substantive argument in favour of impugned addition is outrightly rejected. Coupled with this, the assessee has also filed relevant details of bank account in issue that the impugned sum stood duly repaid vide cheque dated 18.2.2008 cleared on 27.2.2008. Revenue's instant former substantive ground fails therefore. Unexplained bank deposits addition - HELD THAT - As evident from the case records that the impugned sum had been wrongly taken as ₹ 1,44,00,000/- towards unexplained deposits in the bank account wherein the actual figure was ₹ 54 lakhs only and the assessee's cash flow statement had duly explained the source to the tune of ₹ 67,08,674/- - Decided against revenue.

Summary

Issues Involved:
1. Validity of reassessment proceedings under Section 147/148 of the Income Tax Act, 1961.
2. Addition of loans as unexplained income under Section 68.
3. Addition of unexplained bank deposits.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147/148:
The primary issue was whether the reassessment proceedings initiated under Section 147/148 were valid. The CIT(A) quashed the reassessment proceedings on the grounds that they were initiated after four years from the end of the relevant assessment year without demonstrating that the income had escaped assessment due to the assessee's failure to disclose fully and truly all material facts. The appellant argued that all material facts were disclosed during the original assessment, and the reassessment was based on the same material, constituting a mere change of opinion, which is not permissible in law. The CIT(A) relied on several judicial precedents, including the decision of the Hon'ble Supreme Court in CIT vs. Kelvinator India Ltd. (320 ITR 561), which held that reopening on mere change of opinion is bad in law. The Tribunal upheld the CIT(A)'s findings, noting that the Assessing Officer's reasons for reopening were merely to verify facts and did not indicate any failure on the part of the assessee to disclose material facts.

2. Addition of Loans as Unexplained Income under Section 68:
The Revenue's appeal included the issue of the addition of ?25 lakhs as unexplained income under Section 68. The Assessing Officer had made this addition on the grounds that the necessary condition of filing an Overseas Remittance Certificate was not complied with. However, the CIT(A) found that the sum came from a domestic account and not a foreign bank account. The Tribunal upheld the CIT(A)'s findings, noting that the assessee had provided relevant bank account details showing that the sum was duly repaid via cheque, and thus, the addition was not justified.

3. Addition of Unexplained Bank Deposits:
The Revenue also contested the deletion of an addition of ?1,44,00,000/- as unexplained bank deposits. The CIT(A) had deleted this addition, noting that the amount was erroneously taken as ?1,44,00,000/- instead of the actual ?54,00,000/-. The assessee had provided a cash flow statement and bank account statements explaining the sources of the deposits, which the Assessing Officer did not dispute. The Tribunal upheld the CIT(A)'s findings, noting that the actual deposits were explained, and the addition was based on an incorrect figure.

Conclusion:
The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s orders quashing the reassessment proceedings and deleting the additions of loans and unexplained bank deposits. The assessee's cross-objections were dismissed as not pressed. The order was pronounced in open court on 18/06/2021.