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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 3, Chennai, dated 30.12.2016 and pertains to assessment year 2006-07.
The first issue arises for consideration is reopening of assessment under Section 148 of the Income-tax Act, 1961 (in short 'the Act').
Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee filed the return of income for assessment year 2006-07 on 21.03.2007 admitting a total income of `98,98,641/-.
The return was selected for scrutiny and order was passed under Section 143(3) of the Act on 26.12.2008 accepting the income returned by the assessee. Subsequently, the Assessing Officer examined the record once again and found that the Memorandum of Undertaking dated 05.10.2005, whereby the assessee-company was taken over by M/s Malabar Publications, amounts to transfer of knowhow, trademark, commercial rights, etc. According to the Ld. counsel, the Assessing Officer found that it is only a slump sale, therefore, the profit has to be assessed under Section 50B of the Act for short term capital gain. Accordingly, the Assessing Officer found that there was escapement of income. According to the Ld. counsel, four year period expired from the end of the relevant assessment year and the assessment order was also passed under Section 143(3) of the Act. According to the Ld. counsel, it is not a case that there was negligence on the part of the assessee in disclosing the relevant material for assessment. The Assessing Officer, on perusal of records already filed by the assessee, found that there was escapement of income. In the absence of any allegation that the assessee failed to file the necessary material before the Assessing Officer for completing the assessment, according to the Ld. counsel, the assessment cannot be reopened after expiry of four years in view of proviso to Section 147 of the Act.
On the contrary, Shri S. Nataraja, the Ld. Departmental Representative, submitted that the assessee claimed the sale to M/s Malabar Publications as slump sale under Section 50B of the Act. However, the Assessing Officer on examination of records, found that the transaction cannot be considered as slump sale. At the best, according to the Ld. D.R., it can be considered as sale of trademark and other commercial rights under Section 50 of the Act, therefore, the capital gain has to be assessed since the return was accepted without examining. Only now the Assessing Officer found that there was escapement of income.
We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the proviso to Section 147 of the Act. It is not in dispute that four years period expired from the end of the relevant assessment year under consideration. The assessment was also completed under Section 143(3) of the Act. Therefore, unless there is negligence on the part of the assessee in producing necessary material before the Assessing Officer for completing the assessment, the Assessing Officer cannot reopen the assessment. In this case, it is not the case of the Revenue that the assessee has failed to file necessary material for completing the assessment under Section 143(3) of the Act. In fact, the Assessing Officer re- examined the material already available on record and found that the income has escaped assessment. Therefore, this Tribunal is of the considered opinion that reopening of assessment is barred by limitation, therefore, the consequential order cannot stand in the eye of law. The assessment order passed under Section 148 of the Act is quashed.