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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”: HYDERABAD
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No. 422/Hyd/2019 Assessment Year: 2009-10 Shafiuddin Ahmed Quadri, Vs. Asst. Commissioner of Hyderabad. Income-tax, Circle – 7(1), PAN – AABPQ 1650M Hyderabad. (Appellant) (Respondent) Assessee by: Shri P. Murali Mohan Rao Revenue by: Shri T. Sunil Goutam Date of hearing: 15/03/2022 Date of pronouncement: 17/03/2022
O R D E R PER L.P. SAHU, A.M.: This appeal filed by the Assessee is directed against CIT(A) – 9, Hyderabad’s order dated 21/02/2019 for AY 2009-10 involving proceedings u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 ; in short “the Act.
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The assessee has raised 13 grounds of appeal in this appeal, out of which ground Nos 1 to 6 are legal grounds against the reopening of assessment u/s 147 of the Act and ground Nos. 7 to 13 are against the addition of Rs. 98,85,000/- made u/s 69 of the Act.
Brief facts of the case are that the assessee filed return of income for A.Y. 2009-10 on 30.09.2009 declaring income from business at Rs. 7,27,770/-. The assessment in this case was completed u/s 144 on 23.12.2011 assessing the income at Rs. 8,64,24,284/- by rejecting the claim of deduction u/s 80lB and adding a sum of Rs, 30,00,000/- (Investment in Mutual Funds) as unexplained investments u/s 69 of the I.T. Act. Aggrieved the assessee went in appeal before the Ld. CIT(A), the ld. CIT(A) allowed the claim of the assessee under section 80lB amounting to Rs. 8,26,99,514/-. Consequential order was passed on 06.08.2013 assessing the income at Rs. 37,24,770/-. Subsequently, survey u/s 133A was conducted on 8-09- 2015 in the case of Sri Syed Shafiuddin Ahmed Quadri, Prop: M/s. Happy Home Housing.
3.1 During the course of survey proceedings, material evidence was gathered, based on which, it is seen that the assessee had paid cash of Rs. 98,85,000/- to the owners of the land. This cash was paid subsequent to the registration of land. Both the parties have signed on the paper sheet on
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which revenue stamp has also been affixed. Thus, forming an opinion that there is an escapement of income; a notice u/s 148 was issued on 30-09-2015 after taking the prior approval of the Pr. Commissioner of Income Tax-3, Hyderabad. The notice u/s 148 was duly served on the assessee on 30-09-2015. In response to the said notice, the assessee filed letter requesting to treat the return of income filed for the A.Y. 2009-10 on 30-09-2009 as the return of income filed in response to the notice issued u/s 148.
3.2 The assessee was issued notice u/s 143(2) dated 26- 09-2016 and served on 30-09-2016 asking the assessee to respond by 4-10-2016. The AO completed the assessment after adding Rs. 98,85,000/- as unexplained investment in the land u/s. 69 of the I.T. Act, 1961.
When the assessee preferred an appeal before the CIT(A) and filed written submissions along with case law, which were CIT(A) extracted the written submissions filed by the assessee at pages 4 to 14 of his order. After considering the submissions of the assessee, the CIT(A) confirmed the order of AO.
Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT.
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Before us, the ld. AR of the assessee reiterated the submissions made before the lower authorities and submitted that the AO has erroneously reopened the case of the assessee u/s 147 of the Act as the then AO in course of original assessment proceedings had instigated scrutiny wherein he verified every aspect of line items of financials. He further submitted that the AO reopened the assessment only based on the information already available during the course of original assessment proceedings u/s 143(3) o the Act and no evidence was available with the AO with respect to the addition made by him and simply made the addition based on the information available in 143(3) proceedings towards unexplained investment u/s 69 of the Act. He contended that the AO reopened the assessment without any tangible material on hand and without satisfying himself as to the escapement of income and, thus, the basic requirement of satisfaction of the AO for reopening the assessment is missed in this case. He further submitted that the case of the assessee has been reopened beyond 4 years and the case. He submitted that the case was scrutinized u/s 143(3) and the assessee had fully and truly disclosed all the material facts before the AO for completing the assessment. He submitted that even the AO has not recorded the words “fully and truly” in the reasons recorded for reopening the assessment. Therefore, the reasons recorded by the AO is not in conformity with the
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law. He, therefore, submitted that the order passed u/s 143(3) rws 147 may be quashed.
6.1 The ld. AR also submitted that the AO made reopening of the assessment beyond 4 years. For this, he relied on the following cases:
The ld. DR, on the other hand, relied on the orders of lower authorities and submitted that the lower authorities have rightly disallowed the amount u/s 69 of the Act when the assessee failed to explain the source. Further, the ld. DR submitted that there was tangible material available with the AO in the form of investigation report mentioned in the
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reasons recorded. He, therefore, submitted that there is no change of opinion as argued by the ld. AR of the assessee.
We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. In this connection, we refer to the provisions of section 147, which read as under:
“Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : 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 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 necessary for his assessment, for that assessment year:
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Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :— (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but— (i) income chargeable to tax has been underassessed; or
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(ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;
(ca) where a return of income has not been furnished by the assessee or a return of income has been furnished by him and on the basis of information or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India.
Explanation 3.—For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.—For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.”
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8.1 The AO has recorded the reasons for reopening the assessment which are as under:
8.2 On perusal of the said reasons recorded, the AO, inter-alia, recorded that “I have reason to believe that the income of Rs. 98,85,000/- has escaped assessment for AY 2009-10”. Whereas the language used in section 147 is 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 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
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142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year”. In the reasons recorded, there is no allegation upon the assessee to disclose “fully and truly” all material facts necessary for assessment. Therefore, we are of the view that the AO has failed to record the reasons to the satisfaction of the section 147, under which, the assessment was reopened. Further, as contended by the ld. AR that there is neither any new information available with the AO nor any new tangible material in hand other than the information already existing in original assessment and further, there was no failure on the part of the appellant company to fully and truly disclose the material facts necessary for the assessment. Thus, there is no sufficient and impeccable reason for reopening the assessment u/s 147 of the Act. Therefore, in the facts and circumstances of the case the issuance of notice u/s 148 and consequently passing of assessment u/s 147 of the Act is unsustainable. Accordingly, we quash the assessment order passed by the AO u/s 143(3) read with section 147 of the Act. Since the assessment itself is quashed, addition made on such assessment do not survive.
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In the result, appeal of the assessee is allowed in above terms. Pronounced in the open court on 17th March, 2022.
Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 17th March, 2022. kv Copy to : 1 Mr. Shafiuddin Ahmed Quadri, C/o P. Murali & Co., CAs, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad – 82 2 ACIT, Circle – 7(1), Hyderabad. 3 CIT(A) – 9, Hyderabad 4 Pr. CIT – 3, Hyderabad. ITAT, DR, Hyderabad. 5 Guard File. 6
Details Date S.No. 1 Draft dictated on 2 Draft placed before author Draft proposed & placed before the Second 3 Member 4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement 7 File sent to Bench Clerk 8 Date on which the file goes to Head Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order