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2021 (10) TMI 394 - AT - Income TaxReopening of assessment u/s 147 - Additions made on different ground - Addition u/s 68 - unsecured loans - HELD THAT - We find that the Assessing Officer has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in light of the judgment of JET AIRWAYS (I) LTD. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY it would not be open to the Assessing Officer to assess income under some other issue independently. - Decided in favour of assessee.
Issues Involved:
1. Legality of reassessment proceedings under Section 148 of the Income-tax Act, 1961. 2. Addition of ?7,90,50,000/- as unsecured loan under Section 68 of the Act. 3. Violation of principles of natural justice due to lack of notice and opportunity to present the case. Detailed Analysis: 1. Legality of Reassessment Proceedings under Section 148: The assessee challenged the reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961, claiming they were unjustified. The reasons for issuing the notice under Section 148 were based on information received from the Investigation Wing, indicating that the assessee had taken accommodation entries amounting to ?40,00,000/- from shell companies operated by Divya Drishti Group. The Assessing Officer (AO) believed that the assessee had routed unaccounted income through these entries, leading to the reopening of the assessment under Section 147. The Tribunal examined the legal provisions of Section 147/151 and noted that prior to 1989, Section 147 allowed reopening of assessments on two grounds: (i) based on information received by the AO within four years, and (ii) non-disclosure of material facts by the assessee. Post-1989 amendments, the requirement was reduced to the AO having "reason to believe" that income had escaped assessment. In this case, the Tribunal found that the AO did not assess or reassess the income of ?40,00,000/- which was the basis for reopening the assessment. Citing the judgment of the Hon'ble High Court of Bombay in CIT Vs. Jet Airways [I] Ltd 331 ITR 236, the Tribunal held that if the AO does not assess or reassess the income which was the basis for the notice, it is not open to him to assess income under some other issue independently. Therefore, the reassessment proceedings were quashed. 2. Addition of ?7,90,50,000/- as Unsecured Loan under Section 68: The assessee contended that the addition of ?7,90,50,000/- as unsecured loans under Section 68 of the Act was unjustified. The AO had made this addition based on the ledger account of M/s Abhinandan Trafin Pvt Ltd, claiming that the assessee failed to prove the genuineness, identity, and creditworthiness of the transaction. The Tribunal noted that during the assessment proceedings, the assessee clarified that it had not received ?40,00,000/- from Divya Drishti Group but from its sister concern, Abhinandan Trafin Pvt Ltd. The Tribunal observed that the computation of assessed income did not include the ?40,00,000/- which was the basis for the AO's belief that income had escaped assessment. Since the reassessment proceedings were quashed, the Tribunal did not find it necessary to delve into the merits of the addition under Section 68. 3. Violation of Principles of Natural Justice: The assessee argued that the order dated 14.11.2019 was passed without issuing any notice or providing an opportunity to present its case, thereby violating the principles of natural justice. However, since the reassessment proceedings were quashed on legal grounds, the Tribunal did not specifically address this issue in detail. Conclusion: The Tribunal quashed the assessment order dated 28.12.2016 framed under Section 147 read with Section 143(3) of the Act, based on the judgment of the Hon'ble High Court of Bombay in CIT Vs. Jet Airways [I] Ltd. Consequently, the appeal filed by the assessee was allowed, and the Tribunal did not find it necessary to address the merits of the case or the alleged violation of natural justice. Pronouncement: The order was pronounced in the open court on 08.09.2021 in the presence of both the rival representatives.
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