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2014 (2) TMI 732 - AT - Income TaxReopening of the assessment u/s 147 of the Act Disallowance made u/s 14A of the Act held that - Original assessment was completed u/s 143(3) and then again assessment order was made u/s 143(3) read with section 263 - the Assessing Officer had enquired about the rent receipts and had required the assessee to submit the name and addresses of tenants from whom rent was received - the assessee had submitted the complete details of rent received vide reply dated 27.9.2004 - The break up of rent is also available - From the break up it is found that the amount of Rs. 24,68,000/- has been reflected in this break up - The Assessing Officer during original assessment proceedings has treated an amount of Rs. 11,05,55,980/- as income from other sources instead of income from house property on the basis that the property was not owned by the assessee - The amount thus disallowed as income from house property consisted of property at DLF Centre as is apparent from the records where the detail of other property i.e. of Shri Ram School is also placed thus, there was no failure on the part of assessee and therefore reopening on the basis of first reason was not justified. The assessee had furnished the break up of interest and dividend income - The assessee had received dividend income only from one company i.e. DLF Power Ltd. thus, this information was also before the Assessing Officer before passing of the original assessment order as the assessee had submitted complete particulars to him and no further enquiries were sought by the Assessing Officer - Therefore, the reopening on account of second reason was also not justified as the full material facts were before Assessing Officer and there was no failure on its part there was no infirmity in the order of the CIT(A) decided against Revenue.
Issues Involved:
1. Whether the CIT(A) was justified in quashing the reopening of the assessment under section 147 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Justification of Reopening the Assessment under Section 147 of the Income Tax Act, 1961: The original assessment of the assessee was completed under section 143(3) on 31.3.2005, determining the income at Rs. 11,44,04,216/- against the returned income of Rs. 13,91,01,268/-. Subsequently, the case was reviewed by the CIT-IV, New Delhi, and the Assessing Officer was directed to make a proportionate disallowance of expenditure relating to earning of dividend income. Accordingly, an assessment order was completed under section 143(3)/263 on 31.12.2007, making a disallowance of Rs. 6,21,46,028/- under section 14A of the Income Tax Act, 1961. The Additional CIT, Range-X, New Delhi, reopened the case of the assessee, recording reasons that included discrepancies in the income from house property and the disallowance under section 14A. Specifically, it was noted that the income from the Shri Ram School property was not reflected as an asset in the audited balance sheet, and the assessee had claimed deductions and TDS credits that were allegedly not allowable. During the reassessment proceedings under section 148, the Assessing Officer disallowed the claimed business expenditure of Rs. 24,68,000/- and shifted the income from house property to income from other sources. Additionally, the Assessing Officer made a disallowance of Rs. 3,58,99,000/- under section 14A read with Rule 8D. The assessee appealed against the reopening under section 148, arguing that all necessary information was disclosed during the original assessment proceedings, and there was no failure on its part to report all facts. Reliance was placed on several judicial pronouncements to support the contention that reopening after a period of four years without any failure on the part of the assessee was illegal. The CIT(A), after considering the submissions and various judicial pronouncements, held the reopening bad in law and quashed the assessment order. The CIT(A) noted that the original assessment under section 143(3) was completed after the Assessing Officer had specifically inquired and received detailed information about the rent received from Shri Ram School and the dividend income. The CIT(A) concluded that the reopening was based on a mere change of opinion on the same set of facts, which is not permissible under the law. The Revenue, aggrieved by the CIT(A)'s decision, appealed before the Tribunal. The Revenue argued that there were detailed reasons for reopening the assessment, including the wrong claims made by the assessee. The Revenue also contended that fresh material was available with the Assessing Officer, which justified the reopening. The Tribunal, after hearing both parties and examining the material on record, upheld the CIT(A)'s decision. The Tribunal noted that the original assessment was completed after full disclosure by the assessee, and the Assessing Officer had applied his mind to the details provided. The Tribunal found no failure on the part of the assessee to furnish full and true material facts necessary for the assessment. Therefore, the reopening was not justified, and the appeal filed by the Revenue was dismissed. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to quash the reopening of the assessment under section 147 of the Income Tax Act, 1961. The Tribunal held that the reopening was based on a mere change of opinion and not on any failure by the assessee to disclose full and true material facts. Order Pronounced: The order was pronounced in the open court on the 23rd day of August, 2013.
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