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TMI Blog2020 (8) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... s income for assessment year 2009-2010. Therefore, the reassessment was initiated on mere change of opinion. Hence, going by the judicial pronouncements cited supra, we hold that reassessment order for assessment year 2009-2010 is bad in law. Accrual of income - Taxability of freezer deposits received by these assessee from their customers - Issues on merits we notice that the ITAT Cochin bench in its own case [2014 (4) TMI 1227 - ITAT COCHIN] had dismissed the department appeal against the original assessment following its own orders for the earlier years on the ground that the said amount is taxable only in the year of termination and the assessee had already offered such amount to tax in the return of income filed by it. - Decided in favour of assessee. - ITA No.545/Coch/2019 - - - Dated:- 3-3-2020 - Shri Chandra Poojari, AM And Shri George George K, JM For the Appellant : Sri.Mritunjaya Sharma, Sr.DR For the Respondent : Sri.P.M.Veeramani, CA O R D E R PER GEORGE GEORGE K, JM This appeal at the instance of the Revenue is directed against CIT(Appeals) s order dated 24.06.2019. The relevant assessment year is 2009-2010. 2. Two issues are ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reopening of assessment is valid; and (ii) on merits whether the lapsed freezer deposit could be brought to tax in the current assessment year when the dealership agreement has not been terminated. The CIT(A) decided both the issues in favour of the assessee. 5.1 As regards the issue of validity of reopening of assessment, the relevant finding of the CIT(A) reads as follow:- 5. The appellant stated that the Notice u/s. 148 was issued on 30.03.2016 for A.Y. 2009-10, obviously beyond 4 years and, therefore, it could only be done if all the material facts were not disclosed fully and truly during the course of original assessment. The appellant had objected to reassessment on this ground and the AO dismissed the objection of the appellant with following remarks: The AR 's objections were considered and disposed off vide this office letter dated 26.12.2016. It was replied to the assessee that the materials relevant to receipt of freezer deposit necessary for the assessment were not fully and truly furnished by the assessee at the time of original scrutiny assessment. And the assessee company was requested to furnish the documents, accounts and any other evidence on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment appeal against original assessment. ITAT order No.311/Coch/2013 dated 29.07.2013 Page 3-6 of paper book. Notice u/s 148 Notice dated 30.03.2016 Page 7 of the paper book. Particulars Reference in assessment order Reference in CIT(A) order Case law relied on Whether there was failure on the part of the assessee to disclose truly and fully material facts during original assessment Discussion and conclusion in the original assessment para 2.1 (page 16 of paper book) Conclusion in the original assessment Para 2.7 (Page 18 of paper book) Para 2 (Page 13-14 of paper book) order dated 26.12.2016 rejecting assessee s objection to reopening. Paragraph 4 (internal page 2 of 8) of assessment order) Paragraph 6 (internal page 7 of 8) of the order of CIT(A) IBS software Services Ltd. v. UOI (379 ITR 66 Kerala) Whether third proviso to section 147 is attracted that the addition is already a subject matter of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2 In this case, the audited accounts filed by the assessee (Schedule F current liabilities and provision) reflected the following: As at As at 31.03.2008 31.03.2009 2,36,29,596 Deposit and Advances from customers 2,61,28,024 7.3 In the original assessment order completed u/s 143(3) of the I.T.Act, the taxability of freezer security deposits was considered and addition to the income was made by the A.O. The observation of the A.O. in original assessment reads as follows: 2.7 In the light of the foregoing discussion, it is evident that dealer deposit become taxable with efflux of time. The amount that is taxable is worked out and as per annexure 1 to this order. This comes to 20,16,542. The amount is added to the total income. 7.4 The reasons recorded for reopening recorded by AO is as follows:- Since the entire freezer deposits prior to A Y 2006- 07 had already got lapsed by A Y 2009-10, the same ought to have been brought to tax in the A Y 2009-10. By not bringing to tax the lapsed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings and escaped his knowledge; and the fact would have material bearing on the outcome of the relevant assessment order. 7.6 As mentioned earlier, admittedly reopening of assessment was initiated after four years and the original assessment order was completed u/s 143(3) of the I.T.Act. Therefore, the necessary precondition in such situation for reopening the assessment, is that the income has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts. The Assessing Officer in the reasons recorded for issuance of notice u/s 148 of the I.T.Act had not mentioned that income has escaped assessment, on account of non-disclosure on the part of the assessee of full and true material facts necessary for completion of assessment. The taxability of lapsed freezer deposit on proportionate was basis of original assessment, whereas in the reassessment, the lapsed freezer deposit as on 31.03.2006 was sought to be taxed as income for assessment year 2009-2010. Therefore, the reassessment was initiated on mere change of opinion. Hence, going by the judicial pronouncements cited supra, we hold that reassessment order for assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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