2024 (9) TMI 278 - AT - Income Tax

Validity of reopening of assessment - jurisdiction to issue notice - no order u/s 127 passed/communicated for transfer of jurisdiction from ITO, Circle-I, Gandhinagar to DCIT, Circle Gandhinagar - absence of valid sanction as required under Section 151 - Addition u/s 68 - AR submitted that the AO while reopening the assessment has reviewed the original assessment order and, therefore, the review of the original assessment order is not permissible and the assessment itself is bad in law HELD THAT - It is pertinent to note that the contention of the Ld. AR that no order under Section 127 of the Act was passed/communicated for transfer of jurisdiction, but the same is there mentioned in the Assessment Order which categorically does not require any communication to the assessee as it is an internal transfer for the administrative purpose of the Assessing Officer and the powers are envisaged with the concerned authorities. The decision of Ajantha Industries 1975 (12) TMI 1 - SUPREME COURT will not be applicable as the jurisdiction invoked by the Assessing Officer who has the power, passed the Assessment Order in assessee s case. Besides this, the contention of Ld. AR is that there is a review of the original assessment order is also not justifiable as the Assessing Officer while giving the satisfaction note has dealt with the different issues after indicating the same in the reopening while recording the reasons. Thus, the additional ground is dismissed. No proper sanction u/s 151 - CIT(A) has erred in law and on facts in upholding valid reopening of assessment in absence of valid sanction as required under Section 151 of the Act for which it is pertinent to note that the assessee has not objected the satisfaction at the relevant time and, therefore, the following decisions cannot be applicable in assessee s case. Thus, ground nos.1 2 are dismissed. Addition u/s 68 - Assessee has given the details related to Shukan Finance Investment and also has given the details related to the identity of Shukan Finance Investment as relates to genuineness and credit worthiness. The assessee submitted ITR, computation of income and confirmation from Shukan Finance Investment for which the assessee also submitted the details about loan which was subsequently repaid and, therefore, it will not be justifiable to make the addition under Section 68 of the Act as unexplained cash credits. Assessee has explained before the Assessing Officer as well as before the CIT(A) related to the unsecured loan received from the two parties i.e. Shukan Developers Pvt. Ltd. and Shukan Finance Investment and after going through the same, it appears that the Assessing Officer as well as the CIT(A) was not justified in making addition. Thus, ground no.4 is allowed.

Summary

Issues:
1. Validity of reopening of assessment without proper sanction under Section 151 of the Act.
2. Addition made under Section 68 of the Act for unexplained cash credits.
3. Jurisdictional transfer issue regarding the assessment.
4. Review of original assessment order and its permissibility.

Validity of Reopening of Assessment:
The appeal was filed against the CIT(A)'s order for the Assessment Year 2012-13. The original assessment was reopened under Section 148 of the Income Tax Act due to discrepancies. The Assessing Officer observed unexplained cash credits under Section 68 of the Act and made additions. The assessee challenged the reopening, citing lack of valid sanction under Section 151. The Tribunal dismissed this ground, noting that the assessee did not object to the satisfaction at the relevant time, making the cited decisions inapplicable.

Addition under Section 68 of the Act:
The Assessing Officer added Rs. 4,75,00,000 under Section 68 as unexplained cash credits. The assessee provided details of the transactions, including repayments and bank transactions, to establish genuineness. The Tribunal found the explanations satisfactory and allowed the appeal, stating that the addition was unjustified. The Tribunal considered the details provided by the assessee regarding the loans from Shukan Finance & Investment and concluded that the addition was not warranted.

Jurisdictional Transfer Issue:
The issue of jurisdictional transfer from ITO, Circle-I, Gandhinagar to DCIT, Circle Gandhinagar was raised. The Tribunal noted that the transfer was internal and did not require communication to the assessee. It was held that the review of the original assessment order was justified as the Assessing Officer dealt with different issues in the reopening. The Tribunal dismissed the contention that the order of reopening was bad in law due to lack of communication regarding the transfer of jurisdiction.

Review of Original Assessment Order:
The assessee contended that the review of the original assessment order was impermissible. However, the Tribunal found that the Assessing Officer addressed different issues in the reopening, justifying the review. The Tribunal dismissed the additional ground raised by the assessee regarding the review of the original assessment order, citing internal administrative transfer and the Assessing Officer's power to pass the assessment order.

In conclusion, the Tribunal partly allowed the appeal, dismissing grounds related to the validity of reopening and jurisdictional transfer while allowing the appeal on the addition made under Section 68 of the Act. The Tribunal found the explanations provided by the assessee regarding the unexplained cash credits satisfactory, leading to the dismissal of the addition.