ANIL PURI,NEW DELHI vs. ACIT, CIRCLE-49(1), NEW DELHI

initiating proceedings u/s. 147 of the Income-tax Act, 1961 without there being any valid reason for reopening the assessment and the proceedings themselves being barred by limitation.

Aggrieved, the assessee is in appeal before the Tribunal.

We have heard the submissions of both the parties and have gone through the entire material on record including the case laws relied by both the parties. The ld. AR reiterating the submissions made before the authorities below, submitted that the reopening of assessment is invalid having been made beyond the period of limitation, based on change of opinion and the addition of Rs.16.00 lakhs made is not sustainable on merits. The ld. DR, on the other hand, relied on the orders of the authorities below.

It is worthwhile to note that the issue under consideration was properly explained before the ld. Assessing Officer vide reply dated 14/21.12.2012 at the original stage of assessment proceedings. The relevant part of the reply speaks as under : “The assessee has claimed an expenditure of Rs.16.00 lac on account of loss by theft during the year under consideration. The said loss was not covered under insurance. An FIR in this regard was lodged with the police bearing FIR No. 82. The assessee encloses herewith copy of FIR report as annexure C-120 & C-121 for your ready reference. The said loss is an allowable expenditure, being incidental to the carrying of business of the assessee. This principle has been held by the Hon’ble Supreme Court of India in case of Badri Das Daga vs. CIT (1958) 34 ITR 10 (SC).”

A perusal of the assessment order shows that no addition on this account was made, meaning thereby the above explanation of the assessee stood considered and accepted by the Assessing Officer at the original stage of assessment proceedings. It is not in dispute that the impugned notice u/s. 148 has been issued beyond the period of limitation, i.e., four years from the end of the assessment year under consideration. Therefore, if the matter is examined on the anvil of proviso to section 147, in our opinion, it is sine qua non on the part of the Assessing Officer to establish that any taxable income was escaped from assessment due to the failure on the part of assessee to disclose all material facts necessary for completion of assessment. This aspect of the case is lacking in the present case. It is notable that at the initial stage, the issue of theft of Rs.16.00 lacs was well explained by the assessee vide his specific reply dated 14/21.12.2012 and there is nothing on record to establish that any income escaped assessment due to the failure on the part of assessee. In presence of these facts, the notice issued u/s. 148 in the present case is hit by proviso to section 147 of the Act. Based on this aspect of the case, the notice so issued for reopening of assessment is invalid and the assessment reopened in response thereto is also liable to be set aside. Moreover, the issue under consideration stood explained at the original stage of assessment proceedings, proceedings u/s. 154 and the addition so made stood deleted in appeal against the order u/s. 154. Therefore, the same addition made in reassessment proceedings cannot be sustained at all, as lots of debate had already been made in various proceedings before issue of notice u/s. 148 of the Act, which alludes that there was no tangible material or new material before the Assessing Officer to issue the notice u/s. 148. We, therefore, do not find any justification to support the decision reached by the ld. CIT(A) in the impugned order. Accordingly, the appeal of the assessee deserves to be allowed on the above aspect only. Once, the assessment stands set aside on the above legal ground, we need not to enter into other contentions of the assessee on merits of addition.

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