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2021 (7) TMI 996 - HC - Income TaxReopening of assessment u/s 147 - Addition u/s 68 - whether the initiation of 147 proceedings are based on tangible materials or change of opinion? - HELD THAT - Since the assessee has completely failed to discharge his onus, the trade advances was treated as ingenuine and assessed under Section 68 - The said findings would reveal that though the petitioner has filed the list of persons, failed to furnish the complete details of the trade advances and to proof it is arising out of the purchases made in normal course of business. In view of the said non-disclosure, the Assessing Officer has formed an opinion for reopening of an assessment. The findings of the AO reveals that during the original assessment proceedings, the assessee was asked to furnish the details and confirmations, in respect of the unsecured loans. The assessee, vide written submissions made on 12.10.2007, furnished a list containing the name of persons and amount outstanding against them in respect of the unsecured loans. However, the assessee has not furnished the loan confirmation, address and PAN of the persons from whom he claims to have received such loans - Assessing Officer formed an opinion that the onus is on the assessee to substantiate the loans by furnishing the above details to verify the genuinity and credit worthiness of the loan creditors. Since the assessee has completely failed to discharge his onus, the unsecured loan was treated as ingenuine and assessed under Section 68 of the Act. This Court is of the considered opinion that as pointed out by the learned counsel for the petitioner, the assessee has furnished the list of persons and list of unsecured loans. However, the details of the names and other particulars, in order to establish the genuinity of such transactions, were not furnished. Thus, the Assessing Officer has reason to believe that income chargeable to tax escaped assessment due to non-furnishing of the complete informations and details, truly and fully, during the original assessment. This Court do not find any infirmity or perversity in respect of the findings arrived by the respondent, while disposing of the objections. Reasons as well as the inference drawn from and out of the particulars provided by the petitioner are candid and convincing. Thus, this Court is not inclined to interfere with the proceedings initiated for reopening of the assessment. The petitioner has to cooperate with the disposal of the reassessment proceedings. The respondent is bound to proceed with the reassessment and complete the exercise.
Issues:
1. Reopening of assessment proceedings for the Assessment Year 2005-06 based on Section 147 of the Income Tax Act. 2. Validity of reasons furnished for reopening the assessment. 3. Compliance with the pre-conditions under the proviso clause to Section 147 of the Act. 4. Whether the initiation of proceedings was based on tangible materials or a change of opinion. 5. Consideration of objections raised by the petitioner and findings given by the respondent. Analysis: 1. The petitioner, a Company and assessee, filed a writ to set aside the order disposing of objections for the reopening of assessment proceedings for the Assessment Year 2005-06. The petitioner contended that the reopening was based on a change of opinion without any tangible material. The respondent issued a notice under Section 148 for reopening, which the petitioner challenged due to lack of valid reasons. 2. The petitioner requested reasons for reopening, which were furnished by the respondent. The petitioner submitted detailed objections, arguing that all particulars now cited as reasons were available during the original assessment. The petitioner highlighted discrepancies in the treatment of bad debts, emphasizing that all details were previously provided and considered. The respondent rejected the objections, leading to the writ petition. 3. The petitioner argued that the reopening, beyond four years but within six years, did not meet the proviso clause requirements under Section 147. It was contended that all material facts were truthfully submitted during the original assessment, and any discrepancies identified later did not warrant reopening based on the proviso clause. 4. The respondent contended that the petitioner failed to furnish all materials fully and truly, leading to the initiation of reopening proceedings. The Assessing Officer found that the income chargeable to tax escaped assessment due to lack of complete and truthful information provided by the petitioner during the original assessment. 5. The objections raised by the petitioner were considered by the respondent, who found deficiencies in the details provided for trade advances and unsecured loans. The Assessing Officer concluded that the petitioner did not discharge the onus of proving the genuineness and creditworthiness of the transactions, leading to the reopening of the assessment. In conclusion, the Court upheld the findings of the respondent, stating that the petitioner failed to provide complete and truthful information during the original assessment, justifying the reopening of the assessment proceedings. The Court dismissed the writ petition, directing the petitioner to cooperate with the reassessment process to be completed promptly.
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