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Income Tax Appellate Tribunal, ‘D’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi
Date of concluding the hearing : January 17th, 2019 Date of pronouncing the order : February 6th , 2019 O R D E R Per J. Sudhakar Reddy :- This appeal is filed by the Revenue and is directed against the order of the ld. Commissioner of Income Tax (Appeals) - 20, Kolkata (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dated 27/07/2017.
The assessee is a company and is in the business of running a thermal power plant. He filed its return of income for the Assessment Year 2009-10 declaring total income of Rs.2,33,482/-. The assessment was completed u/s 153A r.w.s. 143(3) of the Act on 31.03.2014. This assessment was reopened u/s 147 on the ground that certain information was received from the DDIT(Inv.) Unit -2(3), Kolkata and a notice u/s 148 dated 30.03.2016 was served on the assessee re-opening the assessment. The reopened assessment was completed on 28.12.2016 declaring total income at Rs.87,33,480/-.
Aggrieved, the assessee carried the matter in appeal. The ld. First Appellate Authority held that the reopening of assessment was bad in law. Aggrieved, the Revenue is in appeal before us.
We have heard rival contentions. The reasons for reopening are as follows: “The regular assessment for the assessment year 2009-10 in this case was completed on 31.03.2014 u/s 153A/143(3) of the Income Tax Act, 1961 on a total income of Rs.2,33,482/-. Subsequently this office was in receipt of letter from the DIT(Inv.) Unit- 2(3) Kolkata on 22.03.2016.
2 M/s Adhunik Power & Natural Resources Assessment Year: 2009-10 Information regarding STR No.1000007072 it is observed that M/s. Balkash Exim Pvt. Ltd. received high value funds from several other companies through clearing mode and followed by immediately moved out of the account by clearing mode to several other companies which have a common address although their directors are different persons. The list with value of transactions and the companies with whom the transactions took place. Notice u/s 131 was issued through the departmental inspector to the principal officer of M/s. Balkash Exim Pvt. Ltd. but the notice could not be served as the company was not physically existed as its given address. Notice u/s 133(6) was also issued to SBI Bank, Canara Bank, Indusind Bank, ICICI Bank, Union Bank and OBC Bank on 22.07.2015 for bank statements and KYC information. Some of the compliances were received. On going through the bank statements and list of the companies and on further enquiry it is noticed from the departmental database that funds Rs.85,00,000/- were transferred from various paper companies managed and controlled by Shri Pankaj Agarwal (copy of statement of Shri Pankaj Agarwal dated 11.06.2014 & 03.02.2012 and the list of his paper jamkhharchi are enclosed) to M/s. Balkash Exim Pvt. Ltd. and again transferred to same or other paper / jamkhharchi companies managed and controlled by Sri Pankaj Agarwal and finally to the beneficiary M/s Adhunik Power and Natural Resources Pvt. Ltd.”
A perusal of the reasons demonstrates that the Assessing Officer has not recorded that the assessee has failed to disclose fully and truly any material facts necessary for the assessment. As the reopening is beyond a period of four years, from the end of the assessment year and as the original assessment was completed u/s 143(3) of the Act, the proviso of section 147 of the Act is attracted. The Hon’ble Bombay High Court in Bhavesh Developers vs. Assessing Officer [2010] 329 ITR 249/188 Taxman 123 (Bom) held as follows:
“Significantly, the reasons that have been disclosed to the assessee do not contain a finding to the effect that there was a failure to fully and truly disclose all necessary facts, necessary for the purpose of assessment. In these circumstances, the condition precedent to a valid exercise of the power to reopen the assessment, after a lapse of four years from the relevant Assessment Year, is absent in the present case. There is merit in the submission which has been urged on behalf of the assessee that an exceptional power has been conferred upon the Revenue to reopen an assessment after a lapse of four years. The conditions which are prescribed by the statute for the exercise of such a power must be strictly fulfilled and in their absence, the exercise of power would not be sustainable in law. “
3 M/s Adhunik Power & Natural Resources Assessment Year: 2009-10 6. The Hon’ble Delhi High Court in the case of PCIT vs. Samcor Glass Ltd. in of 2015 wherein it was held as follows: “5. Apart from the fact that the impugned order of the ITAT suffers from no legal infirmity, the Court is of the view that on the face of it, the reasons for reopening of the assessment in both the cases did not satisfy the basic requirement of the law, in at least in two aspects. One was that the reopening was of assessment beyond four years after the AY for which the original assessment was framed and yet the reasons for reopening did not categorically state that there was a failure by the Assessees to disclose any material particulars on the basis of which there were reasons to believe that the income has escaped assessment. This Court has recently, in a decision dated 22nd September 2015 in ITA No. 356 of 2013 (CIT v. Multiplex Trading & Industrial Co. Ltd.), clearly stated in cases where reopening of assessment is beyond four years from the end of the relevant assessment year “the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded with certain level of certainty.”
The Hon’ble jurisdictional High Court in the case of Tantia Construction Co. Ltd. vs. DCIT & Ors (2002) 257 ITR 84 (Cal) held that, in the absence of an allegation that there was failure on the part of the assessee to disclose fully and truly all material fact necessary for assessment, the impugned notice u/s 148 issued after the expiry of four years from the end of concerned assessment year re-opening the assessment is bad in law.
Applying the propositions of law laid down on the above judgment to the facts of this case, we have no hesitation in upholding the order of the ld. CIT(A) where he has quashed the assessment as bad in law. 9. In the result, the appeal of the Revenue is dismissed. Kolkata, the 6th February, 2019.