2024 (2) TMI 530 - AT - Income Tax

Reopening of assessment u/s 147 - notice beyond limitation of 4 years - re-opening of already concluded assessment - addition u/s 68 of the act as unexplained cash credits - HELD THAT - We find that the entities from whom the assessee received the share application are the same which has been subject matter of Section 147 and the reasons recorded thereof in the year 2013 as well as in 2017. We find that the amount received from these five entities have been examined u/s 148 accepted under the order passed u/s 147/143(3) in 2014 and again reasons for reopening has been for the same reasons and for the same entities in 2017 also. There was no new information received by the Assessing Officer other than what has been received by the Directorate of Investigation in 2013. Hence reopening of the case twice for the amount received from same entities in the absence of any new material is construed as bad in law and hence the Assessment order is treated as void ab initio. Decided in favour of assessee.

Issues Involved:
1. Limitation of reassessment proceedings.
2. Reopening based on change of opinion.
3. Independent application of mind in reassessment.
4. Opportunity to cross-examine statements.
5. Arbitrary and injudicious reassessment orders.
6. Additions under Section 68 as unexplained cash credits.
7. Additions based on surmise and conjecture.
8. Lack of conclusive evidence and opportunity to cross-examine.
9. Proof of identity, genuineness, and creditworthiness.
10. Unspecified section for addition of Rs. 4,60,000.
11. Addition of Rs. 4,60,000 as unexplained expenditure under Section 69C.

Summary:

1. Limitation of Reassessment Proceedings:
The assessee argued that the reassessment proceedings initiated by the Assessing Officer (A.O.) were barred by the limitation of 4 years as per the first proviso to Section 147 of the Income Tax Act, 1961. The assessee had fully disclosed all material facts during the original assessment concluded on 29.01.2014.

2. Reopening Based on Change of Opinion:
The assessee contended that the reopening of the already concluded assessment was based on a change of opinion, which is not permissible by law. The Tribunal found that there was no new information received by the A.O. other than what was already available in 2013.

3. Independent Application of Mind:
The reassessment proceedings were challenged on the grounds that they were initiated without any independent application of mind by the A.O. The Tribunal noted that the reasons for reopening in 2017 were the same as those in 2013, indicating a lack of independent application of mind.

4. Opportunity to Cross-Examine:
The assessee argued that the reassessment order was passed without providing an opportunity to cross-examine the statements relied upon by the A.O. The Tribunal found that this procedural lapse rendered the reassessment order bad in law.

5. Arbitrary and Injudicious Reassessment Orders:
The assessee claimed that the reassessment orders were arbitrary, injudicious, and did not appreciate the facts of the case. The Tribunal agreed, noting the absence of new material justifying the reassessment.

6. Additions Under Section 68:
The A.O. had made additions amounting to Rs. 2,34,60,000 under Section 68 of the Income Tax Act as unexplained cash credits. The Tribunal found these additions to be arbitrary and based on conjecture.

7. Additions Based on Surmise and Conjecture:
The assessee argued that the additions were made on the basis of surmise and conjecture without any specific evidence against the assessee. The Tribunal concurred, noting the lack of conclusive evidence.

8. Lack of Conclusive Evidence:
The Tribunal found that the evidence relied upon by the A.O. was not conclusive and general in nature, and no opportunity to cross-examine was provided to the assessee.

9. Proof of Identity, Genuineness, and Creditworthiness:
The assessee claimed to have proved all three aspects'identity, genuineness, and creditworthiness'of the transactions. The Tribunal found that the reopening was not justified as the assessee had already disclosed these aspects during the original assessment.

10. Unspecified Section for Addition:
The A.O. had made an addition of Rs. 4,60,000 without specifying the section under which it was made. The Tribunal found this to be a procedural lapse.

11. Addition as Unexplained Expenditure:
The assessee argued that the addition of Rs. 4,60,000 on account of commission could not be made under Section 69C as unexplained expenditure. The Tribunal agreed, noting the lack of justification for such an addition.

Conclusion:
The Tribunal concluded that reopening the case twice for the same reasons and entities, without any new material, was bad in law. Consequently, the reassessment order was treated as void ab initio, and the appeal of the assessee was allowed. The order was pronounced in the open court on 06/02/2024.

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