ITO, WD-29(4), KOLKATA, KOLKATA vs. SITA DEVI KHAITAN, KOLKATA

The only issue is to be decided as to whether the CIT-A is justified in holding that the reopening of assessment u/s. 147 of the Act is bad in law in the facts and circumstances of the case.

The brief facts of the case are that the assessee is an individual and deriving her income from house property and other sources. The assessee filed her return of income declaring total income of Rs.19,24,528/- and assessment was completed. Thereafter, the assessment was subjected to revision proceedings u/s. 263 and the AO given effect to the said direction of the CIT and determined the income of the assessee at Rs. 25,14,134/- vide his order dt. 17-11- 2011 u/s. 143(3)/263 of the Act. Thereafter, the AO reopened the assessment u/s. 147 by issuing notice u/s. 148 of the Act dt. 18-03- 2013. In pursuant to which, the assessee filed her return of income on 19-04-2013, whereby the AO added an amount of Rs.200,00,000/- (Rs. 2 crores) to her total income under the head ‘undisclosed income’.

Before the CIT-A the assessee challenged the same in respect of re-opening of proceedings and the CIT-A taking into consideration submissions of assessee held that the assessment made u/s. 147 is invalid.

Aggrieved, the revenue is in appeal before us challenging the impugned order of the CIT-A, specifically finding fault that the CIT-A was wrong in not considering that the AO reopened the assessment u/s. 147 basing on new documents showing escaped of income and the AO treated the advance taken by the assessee as taxable income. For which the ld.DR relied on the order of the AO stating that the assessee did not bring to the knowledge of the AO in the original proceedings as well under revisional proceedings u/s. 263 about the receipt of monies on 21/11/05 (Rs.75,00,000/), 28/12/05 (Rs.50,00,000/-), 6/11/06 (Rs.25,00,000/-) and 02/03/06 (Rs.25,00,000/-) to an extent of Rs. 2 crores and the assessee intentionally did not disclose the said amount to the assessment to avoid the tax and to escape assessment.

The ld.AR argued that all the documents relating to the said advance of Rs. 2 crores were submitted to the AO in the original assessment proceedings and the AO raised a specific query vide his notice dt. 18-02-08. In response to which, the assessee filed all the documents vide her letter dt. 16-05-08 as required by the AO explaining the said receipt of Rs. 2 crores received as advance under development agreement. The AO also examined the books of account, details of confirmation of said advance and completed the original assessment. Thereafter, the assessment was subjected to revision u/s. 263 and the AO passed fresh assessment order by giving effect to the direction of CIT, wherein the said advance of Rs. 2 crores was in the knowledge of AO and examined and duly accepted 2 the same. The ld. AR further submits that the assessee provided all the details to the AO as well as to the CIT under revision proceedings inspite of which the AO reopened the proceeding without making any reference to any new document that came to the possession of AO showing that the assessee willfully and truly not disclosed the said amount in the assessment proceedings and referred to reasons recorded by the AO in the impugned order at page 4 of the CIT-A order. The ld. AR argued that the AO reopened the assessment without having any new material of evidence and added the impugned amount of Rs. 2 crores as undisclosed income only on mere change of opinion, which is bad in law. The ld.AR prayed to dismiss the appeal of the revenue and to declare the assessment made u/s. 144/147 as invalid.

Heard rival submissions and perused the material available on record. We find that the AO did not point out any specific new material evidence basing on which the assessment was reopened. It is clear from the reasons recorded, which was reproduced by the CIT- A in his order at page 4. It is observed that the AO raised an objection in respect of impugned amount of Rs. 2 crores vide letter dt. 18-02-2008 and the assessee complied with the same vide her reply dt. 16-05-08 by stating that said receipt was an advance under development agreement. We find that the CIT-A examined the said fact and found that details of said receipt of advance of Rs. 2 crores said to have been received by the assessee under development agreement. The CIT found no error to this effect involving the said amount under revisional proceedings. In our view that the assessee was subjected to two assessments i) under normal proceedings u/s. 143(3) and ii) under giving effect to revision proceedings. We find that the AO examined the books of account and other details in both the proceedings. Therefore, the AO re-opened the assessment proceedings on mere change of opinion and no finding was recorded that the assessee willfully or truly not disclosed all the material facts 3 necessary for assessment. In view of the same, we find no infirmity in the impugned order of the CIT-A and it is justified. We uphold the same. Therefore, the grounds raised by the revenue are dismissed.

In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 18-10-2017