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TMI Blog2024 (11) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ME COURT] wherein it is held that the assessee is obligated to dislodge the primary facts, it is neither required to disclose the secondary facts nor required to give any assistance to the AO by discloser of other facts, it is for the AO to decide what inference are to be drawn from the facts before him. We are of the considered opinion that in present case the revenue, though have alleged so in the reasons to believe, but unable to substantiate any failure on the part of assessee to disclose fully truly all material facts necessary for his assessment. We, thus, find force in the contentions raised by the Ld. AR through the first ground of the present appeal, that the reopening proceedings have been initiated against the assessee beyond a period of 4 years, wherein an assessment u/s 143(3) was already completed on 19.11.2016, therefore, the instant case is squarely falls withing the scope of the provisions of first proviso to section 147, but the action of Ld. AO was not in harmony with the said provision, accordingly, the jurisdiction assumed by the Ld. AO was not tenable in the eyes of law, therefore, the assessment order passed u/s 147 r.w.s. 144 r.w.s. 144B dated 26.03.2022 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible in the eyes of law; reassessment made u/s 147 would be invalid is liable to be quashed; relied on Shri Ram Singh (2008) (Raj); Prosperous Buildcon (P) Ltd (2023) (Del HC). 4. On the facts and circumstances of the case and in law, reopening u/s 148/147 is invalid as based on borrowed satisfaction of escaped income of Rs. 9,01,18,102 on the count of 'deposits/ RTGS credits into bank', which is related to receipts from debtors against accounted sales; it is only 'reason to suspect' merely for verifying the 'deposits/ RTGS credits into bank'; there is no live link/ nexus between the 'information of deposits into bank' 'formation of believe' for alleged escaped income of Rs. 9,01,18,102/- in absence of pre-requisite condition for assuming jurisdiction u/s 147, reopening u/s 148/147 would be invalid; liable to be quashed; relied on Lakhmani Mewaldas (1976) (SC); Shodiman Investments (P) Ltd (2018) (Bom); Meenakshi Overseas (P) Ltd (2017) (Del HC); Smt Sudesh Rani (2023) (Chd-Trib); Jai Prakash Gupta (2021) (Kol-Trib) 5. On the facts and circumstances of the case and in law, approval granted u/s 151(1) by PCIT is invalid as it is without appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was completed on 29.11.2016 determining the assessed income at Rs. 7,86,280/-. 3.1 Later on, in the case of assessee, certain credible information was shared by the Income Tax Officer (Inv.), Raipur, that the assessee s bank account was mainly credited through RTGS transactions inter alia included in the total credits made aggregating to Rs. 9,01,18,102/-, which were subsequently followed by the cash withdrawals to the tune of Rs. 4,32,20,840/-. In this context, notice issued by the Investigation Wing of Raipur, but the assessee has not complied. 3.2 The case of assessee, therefore, was reopened u/s 147 with issuance of notice u/s 148 dated 30.03.2021. After recording the reasons with approval of the Competent Authority, the reopening assessment proceedings u/s 147 r.w.s. 148 are initiated. Initially, the notices issued by the Ld. AO on 16.12.2021, 05.01.2022, 18.01.2022 were not complied by the assessee, therefore, a final opportunity later dated 31.01.2022 was issued requesting the assessee to furnish the requisite information failing which the assessment would be completed u/s 144 of the Act. Assessee again remain non-responsive. Consequently, a show cause notice u/s 144 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in every rupee, which probably could have not been possible, if the information was unverified merely on the basis of presumption. There were the tangible materials in the form of information, was available with the AO, which was verified from the accessibility with the AO in due course, on the basis of which reason was recorded for reopening of assessment. The case was reopened only after approval of the competent/approving authority after being satisfied on the reason so recorded by the AO. The process of reopening of the assessment was done as per provision laid down for reopening of the case under I T Act. In the 'appellant's case reason was recorded on basis of information and on the basis of inquiry made by AO. After being satisfied by the reason so recorded by the AO, granting of approval by the competent/approving authority for issuance of notice u/s 148 of the I T Act is done after following the procedure as laid down u/s 151 of the I T Act. The above said process is as per under Income Tax Act, 1961, therefore, it cannot be claimed that recording of reason and approving the same for issuance of notice u/s 148 of the I T Act was as a most mechanical routine w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment. There is a provision u/s 147 incorporated in the Income Tax Act, that if any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or re-compute the loss or the depreciation allowance or any other allowance or deduction for such assessment year. In the appellant case there was information that the appellant's bank accounts were mainly credited through RTGS and subsequently followed by cash withdrawals, and thus, made high value transaction and accordingly, as per provision of the Income Tax Act, the case was reopened for verification after following the due procedure. After reopening of the case, a notice u/s 148 of the I T Act, dated: 30/03/2021 was issued and served upon the appellant, requiring the appellant to file a return of income within 30 days, for which the appellant was non- complaint during the course of the assessment proceedings. Subsequently, notice u/s 142(1) of the I T Act was also issued in various dates by the AO under principle of natural justice, requesting the appellant to furnish the ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of failure on the part of assessee to disclose fully truly all material facts necessary for his assessment completed u/s 143(3). It was the allegation that in present case, the Ld. AO was failed to do so, therefore, the order passed u/s 147 was without valid assumption of jurisdiction by the Ld. AO. Ld. AR further argued that there is no allegation in the reasons recorded which indicate any failure on the part of assessee qua the discloser as mandated under the provisions of Act, therefore, on this ground itself, the assessment framed u/s 147 r.w.s. 144 r.w.s. 144B is invalid and liable to be quashed. 7. In order to substantiate, the aforesaid contention, Ld. AR drew our attention to page no. 4 and 5 of the assessee s paper book, containing reasons to believe recorded by the Ld. AO, the same are culled out hereunder for better appreciation of the facts. ANNEXURE 1. Brief details of the assessee: Assessee had filed return of income for the A. Y. 2014- 15 in ITR-4 on 30/3/205 declaring total income of Rs. 3,76,830/- and income of the assessee was assessed at Rs. 7,86,276/- vide assessment order u/s. 1431(3) dated 29/11/2016. 2. Brief details and analysis of information collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned. In view of the above, provisions of clause (c) of explanation 2 to section 147 of the Act are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 of the Act is required from the Principal Commissioner of Income Tax:1, Raipur as per the provisions of section 151(1) of the Act. 8. Based on aforesaid submissions, it was the prayer by Ld. AR that since the Assessing Officer, though have mentioned that The above income chargeable to tax has escaped assessment for the A.Y. 2014-15 by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment so far as each deposit in the bank accounts are concerned , but was unable to point out specific error on the part of assessee in disclosing fully truly all material facts necessary for assessment in the original assessment proceedings for the relevant year, therefore, the reopening initiated beyond 4 years after the end of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thermore, because a query was raised and answered, the AO had no jurisdiction to reopen the assessment. 21.1 In this context, reliance was placed on the Full Bench decision rendered by this Court in CIT v. Usha International Ltd. [2012]25 taxmann.com 22/210 Taxman 188/348 ITR 485 (Delhi) and CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433/256 ITR 1(Delhi) 174 CTR 617 (Delhi) (FB), which was upheld by the Supreme Court in CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312/320 ITR 561 (SC). 22. It is also submitted on behalf of SIPL that the Principal Commissioner of Income-tax [in short, PCIT ] did not apply its mind while granting his approval under section 151 of the Act. It was emphasized that he had appended the word approved without examining whether notice under section 148 of the Act was required to be issued in the instant matter. 23. In this regard, reliance was placed on the judgment rendered in United Electrical Co. (P.) Ltd. v. CIT [2002] 125 taxman 775/258 ITR 317 (Delhi), Pr. CIT v. NC. cables Ltd. [2017] 88 taxmann.com 649/391 ITR 11 (Delhi) passed in [IT Appeal No. 335 of 2015, dated 11-1-2017] and CIT v. S. Goyanka Lime Chemicals Ltd. [2015] 64 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opinion on the matter, which was the basis for triggering the reassessment proceeding qua SIPL [ITO v. Techspan India (P.) Ltd. [2018] -92 taxmann.com 361/255- Taxman-152/404-ITR 10] 6 SCC 685. Analysis and Reasons 28. We have heard learned counsel for the parties. The essential facts which have been set forth hereinabove are not in dispute. Thus, what requires our consideration is whether this case necessitated the initiation of a reassessment proceeding. To reiterate, what is not in dispute are the following facts: (i) Both SIPL and STPL are in the real estate business. The subject land was sold during the FY in issue for Rs. 1.51 crores. (ii) Under the MoU/agreement, which was executed between SIPL and STPL, SIPL retained Rs. 1,73,002/-, calculated at the rate of Rs. 1,00,000/- Per, qua the parcel of land which ad-measured 1.7230 acres. (iii) Accordingly, the profit that SIPL offered for the imposition of the tax was Rs. 1,73,002/-. The remaining profit, i.e., Rs. 46,93,536/- was transferred by SIPL to STPL after adjusting the cost of land, i.e., Rs. 1,02,33,462/against the sale consideration amounting to Rs. 1,51,00,000/-. STPL had included the income earned in its profit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cusp of the sixth (6) year, i.e., on 31-3-2018, the AO did not allege that SIPL had failed to disclose fully and truly all material facts which were necessary for carrying out the assessment. This, according to us, was a grave folly. The reason, perhaps, why the AO did not allude to this aspect was because queries were raised during the original assessment, which included questions concerning the sale of the subject land. More particularly, answers were furnished by SIPL, along with the relevant documents and material sought by the AO. Income Tax Officer vs. Parmanand Gupta [2003] 156 taxmann.com 551 (Raipur Trib.) [04.08.2022] in ITA No. 82/2017 (B) Reopening of the assessment in absence of any failure on the part of the assessee in filly and truly disclosing all material facts necessary for assessment:- 13. Admittedly, it is a matter of fact borne from record that the original assessment in the case of the assessee was framed by the A.O u/s. 143(3) of the Act, dated 18-6-2010. Notice u/s.148 of the Act was thereafter issued by the A.O on 23-32015. Accordingly, as the case of the assessee was reopened beyond a period of 4 years from the end of the relevant assessment year, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclose the secondary facts nor required to give any assistance to the A.O. by disclosure of the other facts and it is for the A.O. to decide what inferences are to be drawn from the facts before him. It was categorically observed by the Hon'ble Apex Court that the extended period of limitation for initiating proceedings under the first proviso to Section 147 of the Act would only get triggered where the assessee had failed to disclose fully and truly all material facts necessary for its assessment. 15. As the assessee in the case before us had disclosed all material facts necessary for its assessment, therefore, we are of the considered view that the A.O. as per the limitation provided in the first proviso to sec. 147 was divested of his jurisdiction for reopening the concluded assessment of the assessee beyond a period of four years from the end of the relevant assessment year i.e, AY 2008-09. As in the case before us the original assessment had been framed by the A.O. vide his order passed u/s. 143(3), dated 18-6-2010 therefore, in absence of any allegation on the part of the department that the income of the assessee chargeable to tax had escaped assessment for reason of fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soned and in accordance with the provisions of law, thus, deserves to be uphold. 12. We have considered the rival submissions, perused the material available on record and case laws relied upon by the Ld. AR. 13. On perusal of the reasons recorded dated 30.03.2021, it is transpired that an allegation regarding the failure on the part of assessee was noted by the Ld. AO qua the deposits in bank accounts of the assessee. The bank account in which such deposits were made are duly reflecting in the audited financials of the assessee which were furnished before the Ld. AO in the original assessment u/s 143(3). It is an admitted fact in the present case that the notice u/s 148 for reopening assessment was issued to the assessee on 30.03.2021 for the AY 2014-15, therefore, the reopening proceedings are initiated after the expiry of 4 years from the end of the relevant AY. Under such a situation the reopening was permitted only in a case where there was a failure on the part of assessee to disclose fully truly all material facts necessary for his assessment. The controversy in the present case arises when certain information was received by the Ld. AO for investigation wind that there were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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