Loading judgment…
Facts
The Revenue filed an appeal against the order of the CIT(A) for AY 2012-13. The original assessment was completed under Section 143(3) without any additions. Subsequently, the AO initiated reassessment proceedings under Section 147/148 based on information received about alleged bogus share transactions.
Held
The Tribunal noted that the original assessment under Section 143(3) was completed after specific scrutiny of share applicants, and no additions were made. The reasons for reopening did not mention any failure on the part of the assessee to disclose material facts. The Tribunal found that the reasons recorded by the AO were hit by the first proviso to Section 147, thus quashing the reassessment proceedings.
Key Issues
Whether the reassessment proceedings initiated under Section 147/148 were valid when the original assessment under Section 143(3) was completed after scrutiny and no material facts were suppressed by the assessee.
Sections Cited
143(3), 147, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
O R D E R Per Bench
This is an appeal filed by the revenue against the order of the ld CIT(A, This is an appeal filed by the revenue against the order of the ld CIT(A, This is an appeal filed by the revenue against the order of the ld CIT(A, Patna-3 dated 31.5.2023 in Appeal No.CIT(A), 3 dated 31.5.2023 in Appeal No.CIT(A), Jamshedpur in Appeal No.CIT(A), Jamshedpur in Appeal No.CIT(A), Jamshedpur/10141/2019 Jamshedpur/10141/2019-20 for the assessment year 2012-13. 13.
P a g e 1 | 8
Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri R.R.Mittal, ld AR appeared for the assessee.
It was submitted by ld AR that the impugned assessment year is 2012-13 and the original assessment order came to be passed u/s.143(3) of the Act
P a g e 2 | 8 on17.3.2015. The assessment order passed u/s.143(3) reads as under:“
P a g e 3 | 8
P a g e 4 | 8
Of expenses debited in P&L account under the major head amounting to total Rs.38,68,630/- have been checked at random basis and some discrepancies wee found. Some of the bills/vouchers were found to be petty in nature and intentionally vouched. Considering this fact, 20% of expenses incurred under major head “other expenses” are disallowed and added back to the total income of assessee during the period under consideration,. Considering the above, expenses debited under the head other expenses to the extent of Rs,.7,73,726/- is disallowed and added to the income of the assessee. Add: Rs.,7,73,726/- 6. As discussed above, the total income of the assessee is recomputed as under: Returned loss : Rs.47,70,928/- Add: as discussed in para 5 : Rs.7,73,727/- --------------------------------- Taxable total income: Rs.39,97,202/- `Loss round u/s.288A : Rs.39,97,210/- Assessed fu/s.143(3) at a total income of Rs.Nil at a loss of Rs.39,97,210/- . Charge interest as per rules. Issue demand notice u/s.156 and challan accordingly. Sd/- (Ajay Kumar Singh) Deputy Commissioner of Income Tax,Circle-1 Jamshedpur (Jharkhand) 4. It was the submission that in the assessment order, the reasons for the selection of scrutiny were for verification of certain share transactions that the assessee had done. It was the submission that subsequently notice u/s.148 of the Act came to be issued to the assessee on 30.3.2019 beyond the period of four yers. It was the submission that the assessee has sought reasons recorded
P a g e 5 | 8 and the reasons recorded and the reasons were provided on 9.12.2019, which reads as under:
“In the above context, this is to inform you that your case has been selected u/s.147/148 of the Income Tax Act, 1961. During the course of examination of record/return, the following reasons is recorded for reopening of te case. In the instant case, information has been received from DDIT(Inv), Jamshedpur vide letter No.DDICTR9(Inv) .JSR/OCM/2018-19/1430 DATED 293.2019. In tHe enquiry report it is mentioned that the assessee company was formed on 245,2021 and the total share premium/share capital is Rs.9,67,55,000/-. It is evident from the above fact that the assessee company had shown huge share premium in the same year in which it commenced its operation. List of share allottee of the company was downloaded by the Inv. Wing from the website of Ministry of Corporate Affairs and it was found that the most of the company to whom shares were allotted were Kolkata based shell companies having no creditworthiness. In view of aforesaid facts and circumstances, I have reason to belief that in the instant case share capital/share premium reflected for the relevant financial year to the tune of Rs.9,67,55,000/- was escaped assessment for the corresponding assessment year 2012-13 in which the escapement of income involves more than Rs.1,0,000/-.”
It was the submission that the assessee had objected to the reasons recorded and the assessment order came to be passed on 10.12.2019 being the very next date from the date the reasons were given and the assessee had filed the objection. It was the submission that as the original assessment in the case of the assessee for the impugned assessment year had been done u/s.143(3) and as four years period had already been lapsed from the end of the relevant assessment year, in view of the proviso to section 147, as the reasons recorded had been shown on any violation on the part of the assessee truly and fully
P a g e 6 | 8 discloseall materials facts relevant to his assessment, in view of the proposition laid down by the Hon’le Supreme Court in the case of CIT vs Foramer France,264 ITR 566 (SC) the reopening is liable to be annulled.
In reply, ld CIT DR vehemently supported the order of the Assessing Officer. It was the submission that information had been received from the Investigation Wing and on the basis of such information that transaction towhich the assessee has done with the share applicants were bogus, the reopening had been done. This was clearly failure on the part of the assessee to disclose his transaction which were actually fraud. It was the submission that the order of ld CIT(A) is liable to be reversed and AO restored.
We have considered the rival submissions. A perusal of the provisions of section 147 more so the first proviso reads as follows:
“To invoke Section 148 of the Income Tax Act, 1961 for the purpose of proviso to Section 147 of the Income Tax Act, 1961, there should be a case of failure to truly and fully disclose material facts required for the assessment.
In the impugned case assessment u/s.143(3) has been done in which the assessee was asked specifically for producing the details of share applicants and no addition had been made. Subsequently, the Assessing Officer has initiated reopening. In the reasons recorded, the Assessing Officer has not mentioned anywhere anything regarding failure on the part of the assessee to disclose truly and fully all materials facts which are relevant/necessary for his assessment. As the reasons recorded by the AO are hit by the first proviso to section 147, the P a g e 7 | 8 reasons recorded by the AO are quashed and consequential assessment order also quashed. We find that the ld CIT(A) has considered all facts when he has quashed the assessment. It is noticed that the revenue has not been able to dislodge the findings of facs as arrived at by the ld CI(A). This being so, we find no reason to interfere with the order of ld CIT(A), which is hereby confirmed.
In the result, appeal of the revenue stands dismissed.
Order dictated and pronounced in the open court on 9/06/2025.
Sd/- Sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi; Dated 09/06/2025 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The Appellant : ACIT, Central Circle-1, Ranchi 2. The Respondent: Imperial Automobils Pvt Ltd.,3rd floor, Flt No.3B, 90A, Bakul Bagan Row, Kolkata 3. The CIT(A)-Patna-3 4. Pr.CIT 5. DR, ITAT, 6. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Ranchi
P a g e 8 | 8