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Before: Shri H.S. Sidhu & Shri L.P. Sahu
ORDER Per L.P. Sahu, A.M.: This appeal is filed by the assessee against the order of ld. CIT(A)-17, New Delhi dated 14.09.2017 for the assessment year 2010-11 on the following ground :
“On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the following action of the Assessing Officer:
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.
2. making an addition of Rs.16,00,000/- treating an authentic business loss as a mere personal loss.
Both the above actions are arbitrary, fallacious, unwarranted and illegal must be quashed with directions for relief.”
In order to better understand the issues involved in the above grounds, it is necessary to give following series of facts involved and proceedings carried out in the instant case : (a). The assessee filed the return of income on 15.10.2010 declaring income at Rs.85,90,480/-.
(b). Assessment u/s. 143(3) was completed at an income of Rs.87,93,570/- on 01.02.2013 accepting the income declared by assessee in revised return.
(c). In the Profit & Loss Account, the assessee had debited a sum of Rs.16 lacs on account of “loss on theft” and claimed as business loss/expenditure, explaining the theft of cash from his residence vide reply dated 14/ 21.12.2012 supported with Police FIR.
(d). The Assessing Officer did not make any addition on this account, meaning thereby the reply of assessee dated 14/21.12.2012 stood accepted.
(e). An internal audit took place on 09.09.2013, pointing out that the theft took place at residence of assessee; that as per information of theft given to police authorities by the assessee itself, the assessee saw the case in his drawer at 9.30 a.m. of 20.03.2010 and the same was found missing at 9.00 a.m. of 21.03.2010, whereas the cash of Rs.16 lacs was withdrawn from the cash book on 21.03.2010. Hence, the cash withdrawn from cash book had no nexus with the cash stolen from residence. Hence, the assessee had made wrong claim of trading loss and the same was wrongly accepted by the Assessing Officer in the original assessment order.
(f). Based on the above audit objection, the original assessment order dated 01.02.2013 stood rectified by the Assessing Officer u/s. 154 by making an addition of Rs.16.00 lakhs to the income of the assessee.
(g). In appeal before the ld. CIT(A), the addition made vide order u/s. 154 stood deleted by appellate order dated 22.01.2016.
(h). Thereafter, the Assessing Officer reopening the assessment, issued notice u/s. 148 on 28.03.2016 after recording the reasons, reasons were supplied to the assessee and objections of assessee were disposed of by speaking order and after considering the detailed reply of assessee, the Assessing Officer again made addition u/s. 16.00 lacs to the income of the assessee.
(i). The assessee challenged the order u/s. 147 in appeal before the ld. CIT(A) both on legal ground as well as on merits of additions. But the appeal of the assessee stood dismissed by the ld. CIT(A) vide impugned order.
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.