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2023 (10) TMI 460 - AT - Income TaxReassessment proceedings u/s 147 - Scope of fresh material to initiate reopening - Change of opinion - Addition based on statement recorded on oath u/s 132(4)/133A relied upon which were later on retracted - HELD THAT - Admission of the assessee in survey statements should have been considered as fresh material since such fact was not before the then AO at the time of original assessment u/s 143(3), however, since the issue was already dealt with at length in the assessment u/s 143(3) and an opinion was formed by the Ld AO, moreover the reopening was beyond a period of 4 years from the end of the relevant assessment year, 1st proviso to section 147 was very much triggered and accordingly it was the required to satisfy the twin conditions i.e. (i) Ld AO have reason to believe that income chargeable to tax has escaped assessment; and (ii) have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee to make a return under section 139 for the assessment year under consideration or to disclose fully and truly all material facts necessary for his assessment for that year. In the present case since a new fact was admitted by the assessee by way of statement which was not there before the Ld AO when the original assessment u/s 143(3) was framed, thus, the twin conditions mandated in 1st proviso to section 147 are satisfied and we hold that reopening u/s 147 was validly initiated by the Ld AO. We therefore are not in concurrence with the finding of Ld CIT(A) on this aspect that the reopening was illegal as no fresh material was available with the AO to do so. In the result Ground no 2 of the revenue is allowed. Addition when the assessee had retracted from the statements given during the survey operations - assessee first admitted and surrendered a sum as unexplained / undisclosed income - submission of assessee that the combined retraction of the assessee for 3 AY s was accepted by the Ld AO which is evident from the assessment order for one of the AY i.e. 2018-19 wherein no addition was made by the Ld AO on the basis of survey statements recorded on oath u/s 133A - As it is the fact that the reopening was done on the basis of statement recorded during the survey operations and the same were later retracted by the assessee. AO had relied upon the information available with him without dislodging the retraction of the assessee by way of any material evidence on record. A view taken by the AO in the original assessment proceeding on the basis of certain documents have been seen with a different eye is considered to be a change of opinion only. Section 147 do not allow an AO to have a second look on the evidence which were already examined by the then AO when the assessment under section 143(3) was framed. Hon ble Bombay High court in the case of Ananta Landmark (P) Ltd 2021 (10) TMI 71 - BOMBAY HIGH COURT held that Duty of the assessee is to fully and truly disclose all primary facts necessary for the purpose of assessment it is not part of his duty to point out what legal inference should be drawn from the facts disclosed where on consideration of material on record, one view is conclusively taken by the AO, it would not be open to reopen the assessment based on the very same material with a view to take another view. Under such scenario, we are of the considered opinion that the AO has failed to explain how the appellant has not discharged the onus cast upon it u/s 68 of Act, while the primary information was already made available by the assessee, no new fact could be brought on the record by the department, the basis for reopening i.e. statement of the assessee was available only till the assessee had retracted from the same. Departments plea, relying upon the judgment in the case of Bannalal Jat Constructions (P) Ltd 2019 (7) TMI 137 - SC ORDER that retraction of the assessee should be supported by strong evidence that the earlier statement was under duress and coercion cannot be accepted, when the department is obligated to follow circular of CBDT 286/2/2003-IT (inv) dated 10.03.2003 regarding confession of the assessee during search and seizure and survey operations, if not based on credible evidence are later retracted do not serve any purpose. Another CBDT circular 286/98/2013-IT (Inv.11) 18.12.2014 states that Statement taken even u/s 132(4) of the Act cannot be used as conclusive evidence if it is not backed by credible evidence. Since department was not able to dislodge the retracted statement of assessee with the support of any fresh evidence or material, the addition made was bad in law. It is also the fact emanated from the order of Ld CIT(A) that the assessee had disclosed the true and primary facts during original assessment proceedings even when the subject issue on the basis of which reassessment proceeding were initiated was fully verified and examined by the AO during original assessment proceeding. Thus, there exists a serious lacuna in the findings of the AO. AO not having any fresh information/material in his possession, merely on retracted statement formed his belief about escapement of income which is not sustainable in law. With such observation, after a thoughtful consideration of all the material aspect of the case, in absence of any cogent evidence, addition made on the basis of statement of the assessee which have been retracted later, the additions made by the Ld AO do not hold good in the eyes of law. We therefore direct to vacate the addition made in terms of our observations herein above. Appeal of revenue is partly allowed.
Issues Involved:
1. Validity of the reassessment proceedings under section 147 read with section 143(3) of the Income Tax Act. 2. Consideration of statements recorded during the survey under section 133A as a basis for reassessment. 3. The role of retracted statements in reassessment. 4. Whether the reassessment was based on a change of opinion. 5. The necessity of new tangible material for reopening an assessment beyond four years. 6. The burden of proof on the assessee under section 68 of the Income Tax Act. Summary: 1. Validity of the reassessment proceedings under section 147 read with section 143(3) of the Income Tax Act: The reassessment was initiated based on a survey conducted under section 133A, where the assessee admitted to unaccounted money in the form of share application money. The CIT(A) held that the reassessment was invalid due to the lack of new tangible material and deemed it a change of opinion. However, the Tribunal found that the reopening was valid as the statement recorded during the survey was considered fresh material before its retraction. 2. Consideration of statements recorded during the survey under section 133A as a basis for reassessment: The Tribunal noted that statements recorded during a survey under section 133A do not hold evidentiary value unless corroborated by credible evidence. The CIT(A) emphasized that the statements were later retracted, and no new material evidence was brought forth by the Assessing Officer (AO) to support the reassessment. 3. The role of retracted statements in reassessment: The CIT(A) and Tribunal highlighted that retracted statements cannot be the sole basis for reassessment. The Tribunal referred to various judicial pronouncements and CBDT circulars, stating that confessions during surveys, if not backed by credible evidence, do not serve any purpose. The Tribunal concluded that the AO failed to dislodge the retraction with any material evidence, rendering the addition based on the retracted statement invalid. 4. Whether the reassessment was based on a change of opinion: The Tribunal agreed with the CIT(A) that the reassessment was based on a change of opinion. The issue of share application money was thoroughly examined during the original assessment proceedings, and no adverse inference was drawn. The Tribunal cited the Supreme Court's decision in Kelvinator of India Ltd., emphasizing that reassessment based on a change of opinion is not permissible. 5. The necessity of new tangible material for reopening an assessment beyond four years: The Tribunal noted that for reopening an assessment beyond four years, the AO must have a reason to believe that income has escaped assessment due to the assessee's failure to disclose fully and truly all material facts. The Tribunal found that no new material was available with the AO, and the reassessment was initiated merely based on the retracted statement, which did not satisfy the requirement of new tangible material. 6. The burden of proof on the assessee under section 68 of the Income Tax Act: The Tribunal observed that the assessee had provided all necessary documents to establish the identity, creditworthiness, and genuineness of the share applicants during the original assessment proceedings. The AO's failure to bring any fresh material to counter the assessee's evidence led the Tribunal to conclude that the addition under section 68 was not justified. Conclusion: The Tribunal upheld the CIT(A)'s decision to quash the reassessment proceedings, emphasizing that the reassessment was based on a change of opinion and lacked new tangible material. The addition of Rs. 1,87,50,000/- was vacated, and the appeal of the revenue was partly allowed.
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