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2024 (9) TMI 862 - AT - Income TaxValidity of reassessment proceedings - new tangible material or fresh information in the possession of AO or not? - as argued reopening was done in respect of unreconciled entries in NOSTRO account and amount received from Government under Agricultural Debt Relief and Debt Waiver Scheme based on the disclosures in annual accounts and in respect of amortization of investments based on the claim in the return of income. HELD THAT - Having gone through the judgments of the Hon ble Supreme Court of India in the case of Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT and the order of Assessee s own case 2022 (6) TMI 745 - ITAT CHENNAI we find that reason to believe indispensably be based upon the new tangible material or fresh information in the possession of AO. In this case we find no new tangible material or fresh information in the possession of AO. Therefore,we are of the considered view that if, there is no new tangible material or fresh information in the possession of AO, then if ld.AO assume jurisdiction u/s 147 of the Act it would be nullity and all consequential proceedings pursuant to section 147 is liable to be set aside. Also just before reopening of original assessment, an appeal affect order was given by AO pursuant to order of CIT. The revenue had chance to invoke there issues u/s 263 of the Act but failed to raised these issues in proceedings u/s 263 of the Act. Thus, reopening proceedings set aside - Decided in favour of assessee.
Issues Involved:
1. Reopening of assessment 2. Taxability of unreconciled entries in NOSTRO accounts 3. Taxability of amount received under Agricultural Debt Relief and Debt Waiver Scheme 4. Applicability of provisions of sec.115JB to banks governed by the Banking Regulation Act, 1949 Issue-wise Detailed Analysis: 1. Reopening of Assessment: The assessee contended that the CIT(A) erred in confirming the reopening of the assessment, arguing that the AO assumed jurisdiction to reopen based solely on disclosures in the published Balance Sheet, which cannot be considered fresh information warranting reopening. The Tribunal referred to the judgment of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (320 ITR 561 SC), which emphasized that the power to reopen must be based on "tangible material" and not merely a "change of opinion." The Tribunal found no new tangible material or fresh information in the AO's possession and thus concluded that the reopening was invalid. Consequently, the notice issued under section 147 and all subsequent proceedings were set aside. 2. Taxability of Unreconciled Entries in NOSTRO Accounts: The CIT(A) had confirmed the taxability of net unreconciled entries in NOSTRO accounts outstanding for more than five years, credited to the P&L account. The assessee argued that this sum is not exigible to tax under any provisions of the Act. However, since the Tribunal set aside the reopening of the assessment, it refrained from deciding on the merits of this addition. 3. Taxability of Amount Received under Agricultural Debt Relief and Debt Waiver Scheme: The CIT(A) had held that the amount received from the Government under the Agricultural Debt Relief and Debt Waiver Scheme was taxable. The assessee contended that this amount was utilized to reduce the amount due from farmers and the provision held against these accounts, leading to a double disallowance. Again, due to the setting aside of the reopening, the Tribunal did not adjudicate on the merits of this issue. 4. Applicability of Provisions of Sec.115JB to Banks Governed by the Banking Regulation Act, 1949: The revenue contended that the CIT(A) failed to observe that the provisions of sec.115JB are applicable even to banks governed by the Banking Regulation Act, 1949. The Tribunal noted that the reopening of the assessment was based on the existing material already available on record and not on any new tangible material. Hence, the Tribunal dismissed the revenue's appeal as infructuous. Conclusion: The Tribunal allowed the assessee's appeal partly by setting aside the notice under section 147 and all consequential proceedings, citing the lack of new tangible material or fresh information. Consequently, the revenue's appeal was dismissed as infructuous. The order was pronounced in court on 29th August 2024 at Chennai.
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