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2020 (12) TMI 258 - AT - Income TaxValidity of reopening of assessment - Unexplained investment u/s. 69 - such amount was allegedly paid in cash outside its books of accounts to M/s. V.K. Tours Transport - HELD THAT - During the hearing proceedings, the revenue has been asked whether they would in a position to furnish the reasons recorded even at this juncture for which the reply received has been in negative. Having gone through the factum of the case, we hereby allow the appeal of the assessee as the reasons recorded for reopening have not been furnished to the assessee or produced before the Tribunal with a liberty to the revenue to approach the Tribunal whenever the reasons are traced and made available. Appeal of the assessee is allowed.
Issues Involved:
1. Addition of ?17,76,209/- under Section 69 of the Income Tax Act. 2. Enhancement of addition to ?49,02,000/- by CIT(A) without notice. 3. Additions under Section 41 of the Income Tax Act for cessation of liabilities. 4. Enhancement of additions for cessation of liabilities by CIT(A) without notice. 5. Legality of reopening the assessment. 6. Levy of interest under Section 234. Issue-wise Detailed Analysis: 1. Addition of ?17,76,209/- under Section 69 of the Income Tax Act: The assessee contested the addition of ?17,76,209/- made by the Assessing Officer (AO) on account of alleged unexplained investment. The AO claimed that this amount was paid in cash outside the books of accounts to M/s. V.K. Tours & Transport. The assessee argued that the AO erred in making this addition without conclusive evidence. 2. Enhancement of Addition to ?49,02,000/- by CIT(A) without Notice: The assessee argued that the CIT(A) had no jurisdiction to enhance the addition from ?17,76,209/- to ?49,02,000/- without giving a notice or reasonable opportunity of being heard as mandated under Section 251(2) of the Income Tax Act. The enhanced addition of ?31,25,791/- was deemed wholly illegal and deserving of deletion. 3. Additions under Section 41 of the Income Tax Act for Cessation of Liabilities: The AO made additions of ?86,41,464/- in respect of M/s. Kotak Securities and ?2,85,05,964/- in respect of M/s. Omex Investment & Finance Ltd. under Section 41 of the Income Tax Act, claiming cessation of liabilities. The assessee argued that the AO erred in making these additions without conclusive evidence. 4. Enhancement of Additions for Cessation of Liabilities by CIT(A) without Notice: The CIT(A) enhanced the additions from ?86,41,464/- to ?93,98,872/- for M/s. Kotak Securities and from ?2,85,05,964/- to ?4,87,83,959/- for M/s. Omex Investment & Finance Ltd. The assessee contended that this enhancement, totaling ?2,10,35,403/-, was made without notice or reasonable opportunity to be heard, thus being illegal and deserving deletion. 5. Legality of Reopening the Assessment: The assessee filed an additional ground arguing that the reopening of the assessment was illegal and void ab initio. The Tribunal accepted this additional ground, citing the Supreme Court judgment in National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax, which allows raising new legal grounds if they go to the root of the matter. The Tribunal noted that the assessee was not provided with the reasons recorded for reopening the assessment, despite requests and the ITO's reply stating that the assessment record was not traceable. Consequently, the Tribunal allowed the appeal, giving liberty to the revenue to approach the Tribunal if the reasons are traced and made available. 6. Levy of Interest under Section 234: The assessee contested the levy of interest amounting to ?2,96,12,650/- under Section 234, arguing it was unjust, illegal, and excessive. However, the Tribunal did not specifically address this issue in the final order. Conclusion: The Tribunal allowed the appeal of the assessee primarily on the grounds of procedural lapses by the revenue, particularly the failure to provide reasons for reopening the assessment. The Tribunal granted liberty to the revenue to approach again if the reasons are traced. The appeal was pronounced in favor of the assessee on 27/11/2020.
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