2019 (3) TMI 634 - AT - Income Tax

Reopening of assessment - reasons to believe - failure on the part of the assessee to disclose fully and truly all material facts - HELD THAT - AO has recorded a clear finding in the reasons recorded that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment within the meaning of section 147 of the Act. It has been contended by the Ld. AR that the AO has simply stated that there was a failure on the part of the assessee to fully and truly disclose all the material particulars and the AO has not stated as to which material the assessee had failed to disclose and, therefore, the re-opening was bad in law. However, the contention of the Ld. AR regarding full and true disclosure has to be rejected in terms of explanation 1 to Section 147. The explanation supports the case of the Revenue that mere submission of documents like income returns, copy of PAN cards, copy of bank statements, confirmation from the share applicants etc by itself would not amount to proper disclosure by the assessee as the very material fact that the impugned transaction/s related to accommodation entries was not disclosed by the assessee. Accordingly, we uphold the validity of the re-assessment proceedings - Decided against assessee.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of reassessment proceedings under Section 147 of the Income Tax Act.
3. Addition of ?20,00,000 under Section 68 on account of share capital.
4. Principles of natural justice and the right to cross-examine.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed an appeal with a delay of 13 days, attributing the delay to the appeal papers being kept in the wrong file. An affidavit was filed, and it was argued that the delay was unintentional and not due to negligence. The Revenue opposed the condonation. The tribunal, after considering the submissions, condoned the delay, noting that the assessee would not benefit from intentionally delaying the appeal.

2. Validity of Reassessment Proceedings under Section 147:
The assessee challenged the reassessment proceedings on the grounds that all relevant facts were already before the Assessing Officer (AO) during the earlier assessment, and no fresh material had come to light. The reassessment was based on information received from the Central Circle and the statement of Shri S.K. Gupta, who admitted to providing accommodation entries. The tribunal noted that the reassessment was not solely based on S.K. Gupta's statement but also on corroborative evidence, including ledger accounts found during a survey at S.K. Gupta's premises. The tribunal cited the Hon’ble Gujarat High Court's decision in Yogendra Kumar Gupta vs. ITO, which upheld reassessment based on fresh information from a third party's premises. The tribunal concluded that the reassessment proceedings were valid as they were based on new information that came to light after the original assessment.

3. Addition of ?20,00,000 under Section 68 on Account of Share Capital:
The assessee argued that the addition of ?20,00,000 was unjustified as the share capital transaction had already been examined and verified in earlier assessments. The tribunal found that fresh information gathered during the survey at S.K. Gupta's premises provided a new dimension to the transaction, justifying the reassessment. The tribunal referred to the Full Bench judgment of the Hon’ble Delhi High Court in CIT vs. Usha International, which distinguished between a change of opinion and new factual information coming to light. The tribunal held that the AO was justified in reassessing the transaction based on new evidence, and the addition under Section 68 was upheld.

4. Principles of Natural Justice and the Right to Cross-Examine:
The assessee contended that the reassessment was invalid as they were not given the opportunity to cross-examine S.K. Gupta. The tribunal noted that the statement of S.K. Gupta was not the sole basis for reassessment and that the assessee was confronted with the corroborative evidence found during the survey. The tribunal cited the Hon’ble Apex Court's judgment in M/s. Andaman Timber Industries, which held that the absence of cross-examination does not invalidate proceedings if there is sufficient corroborative evidence. The tribunal concluded that the reassessment proceedings were valid and dismissed the assessee's plea.

Conclusion:
The tribunal upheld the validity of the reassessment proceedings and the addition of ?20,00,000 under Section 68. The appeal of the assessee was dismissed in its entirety. The order was pronounced in the open court on 27.02.2019.

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