DREAM INFRASTRUCTURE,RAJKOT vs. THE INCOME TAX OFFICER, WARD - 1(1)(1), RAJKOT, RAJKOT

The Learned ADDL/Joint Commissioner of Income Tax (Appeals), Panchkula has erred in confirming the action of the Assessing Officer in respect of charging the interest u/s. 234A, B C of the I T Act is totally wrong, unwarranted, unjustified and bad in law.

Your applicant reserves the right in addition or alteration in the grounds of appeal at the time of hearing.” 3.The facts of the case which can be stated quite shortly are as follows: On the basis of information available on records, the assessee`s case was reopened u/s. 147 of the Act after recording the reasons for reopening and obtaining prior approval from the competent authority. Accordingly, notice u/s 148 of the Act was issued on 26.03.2018 and the same was duly served upon the assessee on 29.03.2018. In response to the above notice, the assessee filed return of income, on 23.04.2018, declaring total income of Rs.1/-. The assessee further asked for reasons recorded for reopening the case. Accordingly, copy of reasons recorded was provided to the assessee. Further, notice u/s. 143(2) of the Act was issued on 19.11.2018 and notice/s u/s. 142(1)r.w.s 129 of the I T Act was issued on 19.11.2018 for further required details.

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the CIT(A), who has confirmed the action of the Assessing Officer. The ld. CIT(A) observed that the reopening of the assessment is valid under section 147 of the Act, if the Assessing Officer has a reasonable belief that income has escaped assessment. In assessee`s case, the Assessing Officer acted upon specific information received from the DCIT Central Circle-1, Rajkot. which led to the reopening of the /AY.2011-12 Dream Infrastructure assessment. The fact that there were discrepancies in the accounting records and some unsubstantiated entries in the loose papers warranted further investigation.

On merit, the learned CIT(A) noticed that assessee's claim that payments were made entirely through banking channels, supported by TDS deductions, has been duly examined, however, the Assessing Officer has raised valid concerns regarding the timing of the journal entries and the documentary evidence provided. The assessee's explanations were found to be inconsistent and lacking in corroborative evidence, such as the TDS certificate. It is well settled that the onus is on the assessee to prove the genuineness of the transactions and the non-existence of cash payments. The assessee failed to discharge this onus by providing sufficient documentary evidence to support its claim that no cash payments were made. The assessee could not substantiate its claim with the necessary documents such as the TDS return, challan of TDS payment, or contra accounts from Shri Jawahar Mori's books. In view of the above facts and findings, the reopening of the assessment was justified, and the addition made by the Assessing Officer is based on valid reasons. Therefore, the addition of Rs. 8,00,000/- to the total income of the assessee for the assessment year 2013-14 was upheld by ld. CIT(A).

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal.

Learned Counsel for the assessee, at the outset, argued on the technical ground of reopening under section 147/148 of the Act stating that the assessee’s case under consideration pertains to assessment year (A.Y._ 2011-12, however, the reasons were recorded by the Assessing Officer for assessment year (A.Y.) 2013-14, hence reasons recorded by

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

I have heard the rival parties and have gone through the material placed on record. For the sake of clarity and also being pertinent, I reproduce, reasons recorded by the assessing officer for reopening the assessment, under section 147 of the Act, as follows:

I have gone through the above reasons recorded by the assessing officer and observed that these reasons were recorded in the assessee`s case for assessment year 2013–14, and the instant assessee`s appeal before this Tribunal, is pertaining to assessment year 2011–12. Therefore, the reasons recorded by the Assessing Officer for assessment year (A.Y.) 2011-12, which basically pertains to A.Y. 2013-14, cannot be used for reopen the assessment for assessment year 2011–12. Hence, reasons recorded for the year under consideration, that is, for A.Y. 2011-12 are bad in law and therefore, assessment order should be quashed.

Therefore, I note that the Assessing Officer recorded the reasons for the A.Y. 2013-14 which is mentioned in the reasons recorded by the Assessing Officer, reproduced above. Hence, these reasons recorded by the Assessing Officer does not pertain to A.Y. 2011-12. It is a settled principle of law that only a right person as per the Act, is liable to pay tax on his income in the right assessment year. Hence, there is no escapement of income in the assessee’s case under consideration for assessment year /AY.2011-12 Dream Infrastructure 2011–12. Since the reasons record by the Assessing Officer does not pertain to the A.Y. 2011-12, therefore, I quash the reassessment proceedings for A.Y. 2011-12.

In view of the reasons set out above, as also bearing in mind entirety of the case, I am of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings, for assessment year 2011–12. I, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, the appeal filed by the assessee is allowed.