SHRI SHARADCHANDRA P. AMIN,ANAND vs. THE INCOME TAX OFFICER, WARD-2, ANAND

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ITA 972/AHD/2014Status: DisposedITAT Ahmedabad15 October 2019AY 2004-055 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was invalid because the notice under Section 148 was issued after four years from the end of the assessment year. No failure on the part of the assessee to disclose material facts was established, as required by the proviso to Section 147.

What were the facts?

The assessee's income was assessed at Rs. 49,84,760/-. The Assessing Officer reopened the assessment after four years, citing reasons related to long-term capital gains, property sale, and unsecured loans. The assessee argued that these issues were already considered in the original assessment.

What were the issues?

Whether the reopening of assessment after four years was valid when the original assessment order had already considered the issues and no failure to disclose material facts was alleged.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 68,Section 45,Section 144

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH

For Appellant: Shri P.B. Parmar, AR
Hearing: 25/09/2019Pronounced: 15/10/2019

PER RAJPAL YADAV, JUDICIAL MEMBER:

The assessee is in appeal before the Tribunal against the order of learned CIT(A)-IV, Baroda dated 24th January 2014 passed for Assessment Year 2004-05. The grounds of appeal taken by the assessee are not in consonance with Rule 8 of Income Tax (Appellate Tribunal) Rules, 1963; they are descriptive and argumentative in nature.

2.

In brief, in the first fold of grievance, assessee has pleaded that the learned CIT(A) has erred in upholding the reopening of assessment. The brief facts of the case are that assessee has filed his return of income on 29th March 2006 declaring total income of Rs.2,29,890/-. An assessment order was passed under Section 144 of the Income-tax Act on 26.12.2007 whereby the taxable income of the assessee was determined at Rs.49,84,760/-. The Sharadchandra P. Amin Vs. ITO For AY: 2004-05 2

learned Assessing Officer has reopened the assessment after recording reasons. A notice under Section 148 of the Income-tax Act was issued on 11.03.2011. The reasons recorded by the Assessing Officer read as under:-

“In this case, during the year under consideration the assessee has received goodwill of Rs.17,00,000/- and an amount of Rs.26,23,823/- on account of sale of property from M/s. Hi-Speed Turbo Drive Pvt Ltd which attracts provision of long term capital gain u/s.45 of the Act. Further, the unsecured loans of Rs.1,49,815/- has been credited in the capital account and loans account debited by journal entries. This proves that the unsecured loans were paid by the assessee. Hence the payments of unsecured loans have been made out of the books of account. Therefore, the amount of Rs.1,49,815/- is required to be treated as cash credit u/s.68 of the Act.

In view of the above fact, I have reason to believe that the income chargeable to tax to the extent of Rs.44,73,638/- has escaped the assessment within the meaning of Sec. 147 of the I.T. Act and therefore this is a fit case for issue of notice u/s. 148.”

3.

The learned Counsel for the assessee at the very outset submitted that the amounts sought to be added by way of the above reasons were already added to the total income of the assessee when an assessment order was passed under Section 144 of the Income-tax Act on 26.12.2007. Copy of that assessment order has been placed on record at page nos. 12-16 of the paper- book. He took us through both the issues which are sought to be examined by the Assessing Officer by way of above reasons. He submitted that notice under Section 148 was issued after expiry of four years from the end of the relevant assessment year and, therefore, according to proviso appended to Section 147, no notice under Section 148 could be issued unless it is established that income chargeable to tax has escaped on account of failure of the assessee to disclose all material facts fully and truly. No such Sharadchandra P. Amin Vs. ITO For AY: 2004-05 3

allegation has been leveled by the Assessing Officer in the above reasons. The Assessing Officer has reopened the assessment simply for the reason that original assessment order was quashed by the CIT(A) on the ground that it was passed after expiry of statutory time limit. He, therefore, prayed that reopening be held as null and void. On the other hand, learned Departmental Representative relied upon the orders of the Revenue Authorities.

4.

We have duly considered the rival contentions and gone through the record carefully. A perusal of the reasons would indicate that the Assessing Officer sought to verify whether the Long Term Capital Gain on account of sale of property, cash credit and goodwill received by the assessee deserves to be added or not. A perusal of the computation of income made by the Assessing Officer in the original assessment order would reveal that all these issues have been considered by the Assessing Officer. It is also not disputed that notice under Section 148 of the Income-tax Act was issued after expiry of four years from the end of the assessment year, i.e. AY 2004-

05.

The interdiction provided in the proviso appended to Section 147 puts an embargo upon the powers of the Assessing Officer to reopen an assessment order where original assessment order was passed under Section 143(3)/144 of the Act and four years have expired. The Assessing For AY: 2004-05 4

Representative, at the time of hearing, relied upon the judgment of Hon’ble jurisdictional High Court in the case of Inductotherm (India (P.) Ltd vs. M. Gopalan, DCIT, reported in [2013] 36 taxmann.com 401/[2013]356 ITR 481 – he placed on record a copy of the judgment. A perusal of the above judgment would indicate that the Hon’ble High Court has justified the reopening of the assessment qua one of the issue where it found that justifiable reasons are available for reopening of the assessment. It is not that directly on the point agitated before us. Therefore, it is not applicable on the given facts. In view of the above discussions, we allow the first fold of grievance and quash the reassessment order. Consequently, we do not deem it necessary to examine the other issues. The appeal of the assessee is accordingly allowed.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 15th October, 2019 at Ahmedabad. (AMARJIT SINGH) JUDICIAL MEMBER Ahmedabad; Dated 15/10/2019 Biju T., Sr.PS

आदेश क" ""त"ल प अ!े षत/Copy of the Order forwarded to : अपीलाथ" / The Appellant

1.

""यथ" / The Respondent. 2. 3. संबं!धत आयकर आयु#त / Concerned CIT आयकर आयु#त(अपील) / The CIT(A) 4. 5. &वभागीय ""त"न!ध, आयकर अपील"य अ!धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file.

आदेशानुसार/ BY ORDER,उप/सहायक पंजीकार (Dy./Asstt.

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