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Facts
Ability Services Pvt. Ltd. (assessee) challenged a reassessment for AY 2014-15, initiated by a notice dated 30.03.2021, which made additions for excess depreciation and late EPF/ESI payments. The original assessment under Section 143(3) was completed on 27.12.2016, and the CIT(A) upheld the reassessment.
Held
The Tribunal found that the reassessment proceedings were initiated beyond four years from the end of the relevant assessment year. Crucially, the Assessing Officer's reasons for reopening did not allege any failure by the assessee to disclose material facts. Relying on the Supreme Court's judgment in Ganga Saran & Sons (P) Ltd. vs. ITO, the Tribunal ruled the reassessment was invalid and directed the deletion of additions.
Key Issues
Whether reassessment proceedings initiated beyond four years from the end of the relevant assessment year are valid when no failure to disclose material facts by the assessee was alleged by the Assessing Officer, despite a prior assessment under Section 143(3).
Sections Cited
Section 147, Proviso to Section 147, Section 148, Section 143(3), Section 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BENCH, RANCHI
Before: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahay
Assessment Year: 2014-15 Ability Services Pvt. Ltd…….....................…...........................……….……Appellant 232 Kumhar Para, New Baradwari Sakchi, Jharkhand-831001. [PAN: AACCE1395H] vs. ACIT, Circle-1, Jamshedpur.....…..….…..….........……........……...…..…..Respondent Appearances by: Shri Devesh Poddar, AR, appeared on behalf of the appellant. Shri Khubchand T. Pandya, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 02, 2025 Date of pronouncing the order : July 09, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against an order dated 18.12.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
Brief facts of the case are that the assessee is engaged in the business of contract and transportation and filed its return of income for the assessment year 2014-15 by declaring total income of Rs.81,52,900/-. The case of the assessee was selected for scrutiny and assessment was framed on a total assessed income of Rs.84,49,220/-. Subsequnetly, proceedings u/s 148 were initiated vide notice dated 30.03.2021 and assessment was completed on 20.03.2022 wherein the Assessing Officer made addition of excess depreciation of Rs.36,64,657/- and payment of EPF/ESI beyond the due date but prior to filing of return of Rs.5,31,940/-
Dissatisfied with the above order, the assessee preferred an appeal before the ld. CIT(A) against the reassessment order, where the ld. CIT(A) dismissed the appeal of the assessee and upheld the reassessment order passed by the Assessing Officer.
Aggrieved by the said order, the assessee filed the present appeal before this Tribunal raising various grounds. However, the assessee primary contention is that the reassessment proceedings u/s 147 was beyond 4 years from end of the relevant assessment year, therefore, it is invalid order in law as there was no failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. He stated that assessment order u/s 143(3) had already completed on 27.12.2016 after verification of document filed by the assessee, therefore, there was no occasion to make further reassessment u/s 148 of the Act. The ld. AR also stated that as per proviso to section 147 where assessment has been completed u/s 143(3), no action can be taken u/s 147 after four years unless there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. The ld. AR in order to substantiate his contention relied on the reasons recorded by the Assessing Officer, which is as under:
5.1 The ld. AR further stressed that in the present case, on going through the reasons recorded for reopening, it is seen that there was no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Since no such failure has been established, the condition laid down in first proviso to section 147 of the Act is not satisfied and therefore reopening of assessment is not sustainable. 5.2 In this respect, the ld. AR relied on the judgment of Hon’ble Supreme Court as in the case of Ganga Saran & Sons (P) Ltd. vs. ITO (1981) 130 ITR 1, where it was held that mere change of opinion or vague assumption of the Assessing Officer is not a valid ground for reopening completed assessment, it must be based on failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment.
On the other hand, the ld. DR supported the decisions rendered by the authorities below.
We, after hearing of both the parties and perusing the materials available on record, find that the Assessing Officer while issuing notice u/s 147 of the Act nowhere stated that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment, therefore, the reassessment order framed by the Assessing Officer is bad in law. We rely on the judgment of Hon’ble Supreme Court as in the case of Ganga Saran & Sons (P) Ltd. vs. ITO (supra). The Assessing Officer failed to specify such fact in reason recorded and there was nothing on record at the time of issuing of notice u/s 147 of the Act thus failure on the part of assessee to disclose truly and fully all material facts necessary for the framing of original assessment order. Therefore, we set aside the reassessment proceedings and direct the Assessing Officer to delete the addition.
In the result, the appeal of the assessee is allowed.
Kolkata, the 9th July, 2025.