2020 (11) TMI 170 - AT - Income Tax

Reopening of assessment u/s 147 - Unexplained addition u/s 68 - HELD THAT - As a regular assessment and the Assessing Officer had nowhere recorded the assessee s failure in having disclosed fully and truly, all the relevant particulars, sec. 147 first proviso restricting the exercise of the re-opening jurisdiction without satisfying the corresponding embargo, renders the same as not sustainable in the eyes of law. We quote hon'ble apex court s celebrated decision in K.Y. Pillah And Sons 1966 (10) TMI 35 - SUPREME COURT to affirm the CIT(A) s action quashing the impugned re-opening in entirety as their lordships made it clear long back that such a course of actors may not involve independent examination of the relevant facts at the tribunal s behest.- Decided against revenue.

Issues Involved:
1. Condonation of delay in filing the Revenue’s appeal.
2. Validity of the Assessing Officer’s action initiating proceedings under section 148 read with section 147 of the Income Tax Act, 1961.
3. Deletion of section 68 addition of unexplained cash credits and commission thereupon under section 69C of the Act.
4. Assessee’s cross objection regarding the CIT(A)’s action.

Detailed Analysis:

1. Condonation of Delay in Filing the Revenue’s Appeal:
The tribunal acknowledged the Revenue's condonation petition and noted that the assessee had no objection to the delay. Consequently, the tribunal condoned the one-day delay in filing the Revenue’s appeal ITA No.2396/Kol/2019, allowing the case to proceed for adjudication on its merits.

2. Validity of the Assessing Officer’s Action Initiating Proceedings Under Section 148 Read with Section 147 of the Income Tax Act, 1961:
The Revenue contended that the CIT(A) erred in quashing the Assessing Officer’s action of initiating proceedings under section 148 read with section 147, based on conjecture and surmises. The CIT(A) found that the Assessing Officer did not mention any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The CIT(A) referenced several judicial precedents to support this conclusion, including cases from the Allahabad High Court, Madras High Court, Gujarat High Court, Delhi High Court, Bombay High Court, and Calcutta High Court, which consistently held that reopening of assessment beyond four years requires a clear failure on the part of the assessee to disclose material facts.

The tribunal observed that the assessment year under consideration was 2012-13, and the Assessing Officer had issued the notice under section 148 on 27.03.2018. Since it was a regular assessment under section 143(3), and there was no recorded failure by the assessee to disclose fully and truly all material facts, the tribunal upheld the CIT(A)’s decision to quash the reopening and reassessment order, citing the Supreme Court decision in Commissioner of Income Tax, Bangalore vs. K.Y. Pillah And Sons (1967) 63 ITR 411 (SC).

3. Deletion of Section 68 Addition of Unexplained Cash Credits and Commission Thereupon Under Section 69C of the Act:
The CIT(A) had deleted the section 68 addition of unexplained cash credits amounting to ?3,10,00,000 and the commission thereupon of ?3,10,000 under section 69C. The tribunal, agreeing with the CIT(A), found that the reopening of the assessment was not in accordance with the law, as the Assessing Officer did not record any failure on the part of the assessee to disclose material facts. Therefore, the deletion of the additions was upheld.

4. Assessee’s Cross Objection Regarding the CIT(A)’s Action:
The assessee had filed a cross objection supporting the CIT(A)’s action, arguing that the reopening was not sustainable in law due to the failure to record the exact amount of taxable income escaping assessment. Since the tribunal upheld the CIT(A)’s action quashing the reopening, the assessee’s cross objection was rendered infructuous and dismissed accordingly.

Conclusion:
The tribunal dismissed the Revenue’s appeal ITA No.2396/Kol/2019 and the assessee’s cross objection CO No.48/Kol/2019 as rendered infructuous. The order was pronounced in open court on 21/10/2020.

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