2022 (9) TMI 339 - AT - Income Tax

Reopening of assessment u/s 147 - second round of reassessment - Addition towards unsecured loan / unexplained investment - HELD THAT - Notice u/s.148 was issued in his case qua the investment in land and the AO accepted the genuineness of this transaction without making any addition in his hands. Thus, it becomes evident that the issue, which had attained finality in the first round of the reassessment proceedings with the AO accepting the genuineness and break-up of loan received by the assessee from Dr. A.G. Vakundre, was again sought to be raked up by means of the second round of reassessment. There is no logic in initiating the reassessment proceedings again on the very same basis as constituted the edifice in the first round. The Revenue cannot time and again initiate re-assessment proceedings on the very same issue. Once the proceedings are re-opened, it becomes incumbent upon the AO to give a logical conclusion to such proceedings by examining each and every aspect thereof. Once the genuineness of a transaction is accepted in the first round, the AO is precluded from espousing the same issue once again by means of another round of reassessment. Sword of re-assessment cannot be allowed to hang over the head of the assessee eternally. There has to be an end somewhere, at least of an issue, with the completion of the proceedings in which it was first taken up. We are confronted with a situation in which the AO initiated re-assessment proceedings in the first round on this very issue and passed the order without making any addition by duly recording in the order and accepting the contention of the assessee about having received loan from Dr. A.G. Vakundre with proper details. The re-assessment has been initiated in the second round of proceedings on the same issue, which in our opinion, is totally unfounded. The transactions of acquisition of the land and its payment by Dr. Vakundre are tagged with each other. If the land is the asset of the assessee, then naturally, the corresponding payment is his liability, irrespective of denial by Dr. Vakundre for extraneous considerations. Viewed from any angle, it is patent that the initiation of re-assessment proceedings on this score cannot be validated. We, therefore, overturn the impugned order by quashing the second round of re-assessment proceedings. All the consequential orders passed are hereby set-aside. In view of our decision on the invalidity of the initiation of reassessment proceedings, there is no need to dispose of other grounds raised on merits. - Decided in favour of assessee.

Summary

Issues Involved:
1. Initiation of assessment proceedings.
2. Validity of re-assessment proceedings.
3. Addition of unsecured loan to total income.

Issue-wise Detailed Analysis:

1. Initiation of Assessment Proceedings:
The first issue challenged in the appeals was the initiation of assessment proceedings. The Assessing Officer (AO) initiated re-assessment proceedings and completed the assessment, determining the total income and making an addition towards unsecured loans. The assessees, engaged in the business of Mango, Cashew Grafts, and Land commission, had purchased properties, and the AO received information regarding these purchases, leading to the initiation of re-assessment proceedings.

2. Validity of Re-assessment Proceedings:
The re-assessment proceedings were initiated based on the AO's belief that the investments in immovable property had not been explained and had escaped assessment. In the first round of re-assessment, the AO accepted the genuineness of the transactions and the break-up of loans received from Dr. A.G. Vakundre. However, the second round of re-assessment was initiated on the same grounds. The Tribunal found that the AO had already accepted the genuineness of the transactions in the first round, and there was no logic in initiating re-assessment proceedings again on the same basis. The Tribunal emphasized that once the genuineness of a transaction is accepted, the AO is precluded from re-assessing the same issue again. The Tribunal quashed the second round of re-assessment proceedings, stating that the Revenue cannot repeatedly initiate re-assessment proceedings on the same issue.

3. Addition of Unsecured Loan to Total Income:
In both cases, the AO made additions to the total income by treating the unsecured loans as unexplained. The Tribunal noted that the transactions involved the assessees purchasing land, with payments made directly by Dr. A.G. Vakundre. The assessees reflected the land as their asset and the corresponding payments as liabilities. The Tribunal found that the AO's addition of unsecured loans was unfounded, as the transactions were genuine and the payments were made by Dr. A.G. Vakundre. The Tribunal quashed the additions made in the second round of re-assessment proceedings.

Conclusion:
The Tribunal allowed the appeals, quashing the second round of re-assessment proceedings and the consequential orders. The Tribunal emphasized that the Revenue cannot initiate re-assessment proceedings repeatedly on the same issue and highlighted the importance of finality in assessment proceedings. The Tribunal did not address other grounds raised on merits, as the decision on the invalidity of the initiation of re-assessment proceedings was sufficient to dispose of the appeals.