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TMI Blog2024 (7) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... m and in the Tax Audit Report much later. Under the circumstances, the assessee cannot be charged with any failure to disclose fully or truly all material facts. As explained by the assessee that account with the company was in the nature of current account and as per finding recorded by the Ld. CIT(A), there were 35 transactions during the year. CIT(A) had taken the closing balance only as deemed dividend and the ground taken by the Revenue that the deemed dividend was restricted is not found correct. As per direction of the Ld. CIT(A), only the closing credit balance was required to be verified with reference to accumulated profit of the company. We are of the considered opinion that there was no failure on the part of the assessee to disclose fully and truly all the material facts and, therefore, the jurisdiction of the AO u/s 147 of the Act was not correctly assumed. The fact of any failure on the part of the assessee was neither brought out by the AO nor was evident from the record, which was essential for reopening the case beyond 4 years. Therefore, the reopening done by the AO was incorrect and not in accordance with the 1st Proviso to Section 147 - Decided in favour of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax(appeals) ought to have upheld the order of the Assessing Officer. iii) It is, therefore prayed that the order of the Ld. Commissioner of Income-tax (Appeals) may be set aside and that of the Assessing Officer be restored. iv) The appellant prays for leave, to amend or alter any ground or add a new ground which may be necessary. 4. In the course of hearing, an application under Rule 27 of the ITAT Rules was made by the assessee and the following ground was raised: That the learned CIT(A) has grievously erred in confirming the reopening of assessment u/s 147 of the Act, whereas, it ought to have been held as invalid, as re-opening is beyond 4 years and original assessment was framed u/s 143(3), then again order is passed u/s 143 (3) rws 147 and this is the second re-opening of assessment, which is invalid as per Proviso to section 147 of the Act. 5. It is found that no CO was filed by the assessee against the appeal preferred by the Revenue. As per Rule 27 of ITAT Rules, the respondent, even though he may not have appealed, may support the order appealed against on any of the grounds decided against him. It is found that the assessee had taken a legal ground before the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truly all the material facts. 8. We have carefully considered the rival submissions. There is no dispute to the fact that the matter was examined twice by the AO in the original and the re-assessment. This is the second reopening of the case carried out after completion of 4 years from the end of the assessment order. Therefore, the Proviso of Section 147 of the Act was squarely applicable to the second reopening. The said proviso is found to be as under: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure 76 on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts 76 necessary for his assessment, for that assessment year: 9. As per this proviso, the AO cannot assume jurisdiction under Section 147 of the Act after expiry of four years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement to file details of all the persons from whom loan was obtained along with the return of income. These details can be furnished by the assessee only if the AO makes specific query in this regard in the course of assessment. Neither the AO nor the CIT(A) have made out in case that the details of loan was called for from the assessee in the course of original or reopened proceeding, but it was not furnished by the assessee. If the AO doesn t ask for details in respect of loans appearing in the balance sheet, there was no occasion for the assessee to furnish these details. As per the norm of assessment, the details of unsecured loan is invariably called for in the assessment proceeding along with the confirmation. The AO has not brought out any default of the assessee in this respect either in the original or in the first reopened proceeding. Therefore, the fact that there was any default on the part of the assessee in furnishing the required information is not evident from the reason of the AO as well as from the order of the Ld. CIT(A). 12. The Ld. CIT(A) has upheld the reopening on the ground that there was a new information available with the AO to reopen the case. That by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrict the deemed dividend to the extent of accumulated profit, if found to be less than this amount. 14. It is, thus, clear from the above reasoning of the Ld. CIT(A) that the transaction of the assessee with Shri Rang Infrastructure Pvt. Ltd. was in the nature of current account transaction and the entire cumulative credit of Rs. 3,08,90,000/- could not have been held as deemed dividend, as done by the AO. In fact, the Ld. CIT(A) had taken the closing balance of Rs. 13,43,075/- only as deemed dividend and the ground taken by the Revenue that the deemed dividend was restricted to Rs. 1,03,18,143/- is not found correct. As per direction of the Ld. CIT(A), only the closing credit balance of Rs. 13,43,075/- was required to be verified with reference to accumulated profit of the company. 15. In view of the above facts, we are of the considered opinion that there was no failure on the part of the assessee to disclose fully and truly all the material facts and, therefore, the jurisdiction of the AO under Section 147 of the Act was not correctly assumed. The fact of any failure on the part of the assessee was neither brought out by the AO nor was evident from the record, which was ess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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