2017 (7) TMI 859 - AT - Income Tax

Reopening of assessee - Addition u/s 68 - unexplained cash credit in the form of share capital - Held that - No new information has been flown to the Assessing Officer after the order passed u/s 143(3) dated 6.11.2009 i.e. original assessment. He brought to my notice at page P.B. 7 the reasons recorded and the statement of the Mr. Tarun Goyal recorded on 2.8.2009 much before the date of the original assessment is a matter of record at P.B. 2 and 3. The first provision of the section 147 shall come into play when there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the present case as pointed out earlier the Assessing Officer and the ld. DR has not on record any new fact while recording the reasons u/s 147/148 of the Act. Therefore there is change of opinion. Moreover during the enquiries made in response to u/s 133(6) which was complied with there is no observation on the said compliance by the assessee and therefore in the circumstances and facts of the case the notice issued is lacking the reasons to believe and assessee having disclosed all the material facts in the original assessment and no new facts have been recorded in the reassessment proceedings and therefore the assessment/reassessment made has rightly made by the ld. CIT (A) is directed to be quashed. - Decided in favour of assessee.

Summary

Issues:
1. Validity of addition u/s 68 for unexplained cash credit in the form of share capital.
2. Validity of re-assessment order passed u/s 147.

Issue 1: Validity of addition u/s 68 for unexplained cash credit in the form of share capital:
The appeal by the revenue challenged the deletion of the addition u/s 68 amounting to ?48,00,000 made by the AO on account of unexplained cash credit in the form of share capital for the A.Y. 2007-06. The assessee company received share application money from two companies, and the order u/s 143(3) accepted the identity, creditworthiness, and genuineness of the share capital. The revenue contended that the statement by Sh. Tarun provided sufficient material to justify the addition. However, the ld. CIT(A) quashed the re-assessment order passed u/s 147, stating that the reopening of the assessment was not valid. The ld. AR supported the ld. CIT(A) by arguing that the AO's action was a mere change of opinion and not sustainable. The ld. CIT(A) found that the reasons for reopening did not disclose any new material facts and relied on precedents to conclude that the reassessment was not valid.

Issue 2: Validity of re-assessment order passed u/s 147:
The re-assessment order passed u/s 147 was challenged by the revenue, contending that the ld. CIT(A) wrongly quashed the order. The ld. CIT(A) based the decision on the lack of new information provided to the Assessing Officer after the original assessment. It was noted that the reasons recorded and the statement of Mr. Tarun Goyal were available before the original assessment. The ld. CIT(A) found that there was a change of opinion and no failure on the part of the assessee to disclose material facts. The decision was supported by citing relevant case laws and judgments, ultimately leading to the dismissal of all grounds of the revenue and upholding the quashing of the assessment.

In conclusion, the judgment by the Appellate Tribunal ITAT Delhi addressed the validity of the addition u/s 68 for unexplained cash credit in the form of share capital and the re-assessment order passed u/s 147. The Tribunal found that the reassessment was not valid due to the lack of new material facts and the action being a change of opinion. The decision was based on thorough analysis and legal precedents, resulting in the dismissal of the revenue's appeal.