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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Appearances by: Assessee represented by :Sunil Surana, AR Department represented by :P.P. Barman, Addl. CIT, Sr. DR Date of concluding the hearing :July 08, 2024 Date of pronouncing the order :October 07, 2024
ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short „AY‟) 2013-14is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the „Act‟) by the Learned Commissioner of Income Tax (Appeals) (in short „the Learned. CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, dated 30.03.2024 arising out of Assessment
The Assessee has raised the following grounds of appeal:
“1. For that the Ld. CIT(A) erred in dismissing the technical grounds in summary manner without any speaking order.
2. For that the Ld CIT(A) erred in upholding the reassessment proceedings when there was no application of mind and the requirements for initiation of proceedings u/s 147 were not fulfilled as such the assessment is liable to be quashed.
3. For that the Ld CIT(A) erred in not disposing the ground that the proceedings having been initiated after 4 years from the end of the assessment year without any whisper that there was no true and full disclosure in the original assessment proceedings as per mandate of section 147, was bad in law when the original assessment was completed u/s 143(3).
4. For that the Ld CIT(A) erred in upholding the reopening of assessment when it was based on material which was available with the AO before passing original assessment order under Section 143(3), the same was examined by him and therefore, it is nothing but change of opinion and as such not in accordance with law.
5. For that the Ld CIT(A) erred in upholding the reopening of the assessment when it was based on the statement of Mr. Sachet Saraf which was subsequently retracted by him before the issue of notice u/s 148.
6. For that the Ld CIT(A) erred in upholding the proceeding u/s 147 whenthe was same initiated without providing the copy of the material / statement to and without the even providing an opportunity to cross examine the persons inspite of specific request.
7. For that the Ld CIT(A) erred in upholding the assessment when the objection of the assessee in reopening of the assessment was not disposed of.
8. For that the Ld CIT(A) erred in upholding the assessment when it was completed without providing the copy of the sanction obtained u/s 151 specifically requested by the assessee.
9. For that the Ld. CIT(A) erred in confirming the disallowance of Rs 28,48,100 as alleged bogus loss in currency derivatives from Marigold Vanijya Pvt Ltd without appreciating the submissions when all the documentary evidences with regard to De-Con Projects Pvt. Ltd. the same were submitted to AO and he did not find them incorrect nor did he controvert the same. 10For that the Ld CIT(A) erred in confirming the addition of Rs 28,21,847 as alleged bogus profits from Kredent Brokerage Services Pvt Ltd when all the documentary evidences with regard to the same were submitted to AO and he did not find them incorrect nor did he controvert the same. Further, the said amount of profit was already included in Rs 28,48,100 already disallowed by the AO.
For that the Ld CIT(A) erred in confirming the addition of Rs 1,70,167/- u/s 69C as alleged commission expense paid by the for bring back unaccounted money in the books is also not valid and is liable to be deleted.
For that even otherwise the additions were bad in law and are liable to be deleted.”
Brief facts of the case are that the assessee filed its return of income for the A.Y. 2013-14 and the original assessment was completed under Section 143(3) of the Act on 28.03.2016. The reassessment proceedings wereinitiated on 30.03.2021 beyond 4 years from the end of the relevant assessment year by issuing notice under Section 148 of the Act by making certain addition as in the case of the assessee.
Dissatisfied with the above order, the assessee went in appeal before the Learned CIT(A), where the appeal of the assessee was dismissed.
Aggrieved by the order of the Learned CIT(A). The assessee is in appeal before this Tribunal raising multiple grounds. However, the main grievance of the assessee is that the reopening of the assessment beyond 4 years is not valid as there was, no failure on the part of the assessee to disclose fully and truly all material facts during the original assessment proceedings. According to the assessee, the reassessment based on same material that was already available with the Assessing Officer during the original assessment year and reopening is nothing but change of opinion which is impermissible under the law. The Learned Authorised Representative argued that the reassessment proceedings initiated after 4 3 De-Con Projects Pvt. Ltd. years are hereby bad in law under the provision to section 147 of the Act.In the present case of the assessee, the original assessment was completed after scrutiny under Section 143(3) and all relevant details were submitted of framing at the timeof original assessment order. The Learned Authorised Representative further submitted that the reassessment was based on information that was already available to the Assessing Officer during the original assessment order, therefore, the reopening the assessment order to mere change of opinion which is not permissible under law. The Learned Authorised Representative relied on the various judicial proceedings including the decision of the Hon'ble Supreme Court as in the case of Indian & Eastern Newspaper Society Vs. CIT (1979) 119 ITR 996 (SC) were Hon'ble Apex Court held that the reassessment based on mere change of opinion is not valid. Moreover, reassessment proceedings were based on statement of Mr. Sachet Saraf who had allegedly provided bogus loss to the various beneficiaries including assessee.The Learned Authorised Representative contended that this statement made by Mr. Sachet Saraf was subsequently retracted before issuance of notice under Section 148 of the Act. Therefore, the reassessment based on such a statement was unjustified.
On the other hand, the Learned Departmental Representative supported the orders of the Assessing Officer and the CIT(A) contending that the reassessment was validly initiated based on fresh information received after completion of the original assessment. The learned Departmental Representative argued that the Assessing Officer had sufficient reasons to belief that income had escaped assessment and reassessment proceedings were in accordance with provision of the Act.
De-Con Projects Pvt. Ltd.
We have heard the rival submission and perusing the material available on record. The core issue our consideration that the reopening of the assessment beyond 4 years is valid or not, particularly when the original assessment was completed u/ s 143(3) of the Act did not allege any failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment. The proviso to section 147 clearly stipulate that where an assessment under Section 143(1) has been completed, no action shall be taken under Section 147 after expiry of 4 years from the end of the relevant assessment year unless there is a failure on the part of the assesseeto disclose fully and truly all material facts necessary for assessment. In the present case, reassessment proceedings were initiated after the expiry of 4 years and there is no allegation of any such failure on the part of assessee to disclose fully and truly material facts necessary for assessment. The Learned Assessing Officer merely relied on the same material that was available during the original assessment which leads us to conclude that the reopening based on change of opinion. The Hon'ble Supreme Court in the case of Indian & Eastern Newspaper Society Vs. CIT (supra) has held that the reassessment based on mere change of information does not confer jurisdiction of the Assessing Officer to reopening the assessment.
In the present case, the Assessing Officer already considering the materials relating to the assessee‟s transaction during the original assessment proceedings and reassessment was initiated based on the same. Therefore, reopening of assessment is invalid. Hence, the Learned Assessing Officer relied on the statement of Mr. Sachet Saraf who allegedly provided bogus loss to the various beneficiaries including assesessee. However, the Learned Authorised Representative has submitted that Mr. Sachet Saraf retracted the statement before issuance of notice under 5 De-Con Projects Pvt. Ltd. Section 148 of the Act. In the absence of the any corroborative evidence to support the allegation of bogus loss to beneficiaries, on this statement alone is not sufficient to justify reassessment.
In terms of the above, we held that the reopening of the assessment beyond 4 years from the end of the reassessment year is invalid as it was based on mere change of opinion and there was no failure on the part of the assessee to disclose fully and truly all materials facts necessary for the assessment. Accordingly, the reassessment proceedings initiated under Section 148 of the Act and consequent addition made by the Assessing Officer are quashed.
In the result, appeal of the assessee isallowed. Kolkata, the 7th October, 2024.