2013 (3) TMI 149 - AT - Income Tax

Reassessment - addition of any other income - there is no addition on the very reason for reopening - held that - Admittedly this reopening was done within 4 years. It is the only prohibition applicable if the action of reopening is admitted u/s 147 after expiry of four years from the end of the relevant assessment year. The AO has found on perusal of the assessment records that there was a case which makes the AO to have a reason to believe that the assessee has inflated the total purchase value of the gold. The reason for reopening the assessment is quite justified as we need not go into the sufficiency of the reasons for reopening. It is only the prima facie reason to believe that income has escaped assessment. If the AO was of the reason that there is a specific disclosure of each material fact and that such disclosure should not be garbled or hidden in the material which has been filed by the assessee to the AO. The assessee must act with candour. The gold was received in the financial year 2003-04 and the relevant purchase has to be entered in the financial year 2003-04 only and not in financial year 2004-0. The profit on sale was shown under the head other income and adjustment profit on unfixed deal . The AO treated this as cash credit u/s 68 of the IT Act. Therefore the AO has valid reason to believe that income has escaped assessment because the assessee s failure to disclose the material facts necessary for assessment for the relevant assessment year. - Decided in favor of revenue.

Issues Involved:
1. Validity of reassessment proceedings.
2. Alleged change of opinion by the Assessing Officer.
3. Justification for reopening the assessment without new material.
4. Reliance on Section 124(3) of the Income Tax Act.
5. Addition of Rs. 1,51,09,660 due to alleged suppression of sales.
6. Charging of interest under Sections 234B and 234D of the Income Tax Act.

Detailed Analysis:

1. Validity of Reassessment Proceedings:
The assessee challenged the validity of the reassessment proceedings initiated by the Assessing Officer (AO). The AO issued a notice under Section 148 of the Income Tax Act, 1961, within four years from the end of the relevant assessment year, based on the discovery of an excess debit of Rs. 1,51,09,660 in the purchase of gold and silver. The Tribunal upheld the AO's action, citing the Supreme Court decision in Rajesh Jhaveri Stock Brokers (P) Ltd. and the Gujarat High Court decision in Praful Chunilal Patel, which supported the reopening of assessment within four years.

2. Alleged Change of Opinion:
The assessee argued that the AO did not form any opinion during the original assessment proceedings under Section 143, and hence, there was no change of opinion. The Tribunal noted that mere production of evidence before the AO is not sufficient to establish that an opinion was formed. The AO's reason to believe that income had escaped assessment was deemed justified, as the reassessment was based on the belief of inflated purchase value of gold, which was not explicitly recorded during the original assessment.

3. Justification for Reopening Without New Material:
The assessee contended that the reopening was unjustified in the absence of any new material or information. The Tribunal rejected this argument, stating that the AO had sufficient reason to believe that income had escaped assessment based on the discrepancy found in the purchase records. The Tribunal emphasized that the AO's belief need not be based on new material but on the reassessment of existing records.

4. Reliance on Section 124(3) of the Income Tax Act:
The Commissioner of Income Tax (Appeals) [CIT(A)] relied on Section 124(3) to hold that the time limit to raise an objection against the notice under Section 148 had expired. The Tribunal found this issue academic, given that the reassessment's validity was already affirmed.

5. Addition of Rs. 1,51,09,660 Due to Alleged Suppression of Sales:
The AO initially made an addition under the head "bogus purchases," but the CIT(A) sustained the addition under "suppression of sales" of 25 kg of gold. The Tribunal upheld this addition, agreeing with the CIT(A) that the assessee failed to disclose fully and truly all material facts necessary for the assessment. The Tribunal noted discrepancies in the assessee's explanation regarding the purchase and sale of gold bars and found the AO's reason to believe that income had escaped assessment to be justified.

6. Charging of Interest Under Sections 234B and 234D:
The assessee contested the interest charged under Sections 234B and 234D. The Tribunal held that the interest is consequential and does not require separate adjudication, as it follows from the reassessment's outcome.

Conclusion:
The Tribunal dismissed the appeal of the assessee, affirming the validity of the reassessment proceedings, rejecting the arguments of change of opinion and lack of new material, and upholding the addition of Rs. 1,51,09,660 due to suppression of sales. The interest charged under Sections 234B and 234D was deemed consequential.

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