AMANCHERLA VENKATA PRABHAKAR RAO, NELLORE vs. INCOME TAX OFFICER, WARD-5, NELLORE

At the outset, it is seen that there is 2 days delay in filing of this appeal. After hearing the learned DR, the delay of 2 days in filing of this appeal is hereby condoned and the appeal is admitted for adjudication.

The brief facts of the case are that the assessee deriving income from real estate business and other sources filed his return of income for the A.Y 2009-10 on 8/9/2009 declaring total income of Rs.1,92,860/-. The Assessing Officer completed the assessment u/s 143(3) of the I.T. Act, 1961 on 11/10/2011 by making addition of Rs.80,000/- for non-submission of details of sundry creditors. The assessment has been subsequently, reopened u/s 147 of the I.T. Act, 1961 on the ground that income chargeable to tax has escaped the assessment and accordingly, notice u/s 148 of the I.T. Act, 1961 dated 11.3.2015 was issued and duly served on the assessee on 13/03/2015. The case has been selected for scrutiny and during the course of assessement proceedings, the Assessing Officer noticed that the assessee has deposited cash to the tune of Rs.47,67,500/- during the year under consideration and has furnished confirmation to the extent of Rs.28,34,000/-. For the balance amount of Rs.19,33,500/- the assessee could not explain the source. Therefore, made addition of Rs.19,33,500/- u/s 68 of the I.T. Act, 1961.

Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A), the assessee challenged the addition made by the Assessing Officer towards the source for cash deposit u/s 68 of the I.T. Act, 1961. The assessee had also filed additional ground challenging the validity of reopening of the assessment in light of 148 notice dated 11/03/2015 issued by the Assessing Officer.

Aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee referring to the notice u/s 148 dated 11/03/2015 submitted that the assessment for the impugned A.Y has been originally completed u/s 143(3) of the I.T. Act, 1961 on 11/10/2011 and subsequent reopening of the assessment u/s 147 of the I.T. Act, 1961 is admittedly beyond 4 years from the end of the relevant A.Y. He further submitted that the Assessing Officer has reopened the assessment based on information available with the assessment folder without there being any fresh tangible material and also without any allegation on the appellant for failing to disclose fully and truly all material facts necessary for assessment. Therefore, he submitted that reopening of the assessment is bad in law and need to be quashed.

The learned Counsel for the assessee further submitted that the appellant has explained the source for balance cash deposits of Rs.19,33,500/- out of cash in hand available with the assessee from his real estate business and also filed the Page 3 of 6 relevant details to the Assessing Officer and the learned CIT (A), but the learned CIT (A) without considering the relevant details filed by the assessee made addition towards cash deposits and thus,, the addition made by the learned CIT (A) should be deleted.

The learned DR, on the other hand, supporting the orders of the authorities below submitted that the reopening of the assessment u/s 147 of the I.T. Act, 1961 is on sound footing going by the reasons recorded by the Assessing Officer for reopening of the assessment, where it has been clearly brought out the escapement of income on account of failure of the assessee to disclose fully and truly all material facts necessary for his assessment. As regards the addition towards the source for cash deposits, the appellant could not file any details. The Assessing Officer and the learned CIT (A) after considering the relevant facts has rightly made addition and their orders should be upheld.

I have heard both the parties, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the original assessment for the impugned A.Y has been completed u/s 143(3) of the Act on 11/109/2011. It is also an admitted fact that, notice issued u/s 148 of the Act on 11/03/.2014 is beyond 4 years from the end of the relevant A.Y. As per the 1st proviso to section 147 of the I.T. Act, 1961, in case of original assessment is completed u/s Page 4 of 6 143(3) of the Act, no action can be taken under this section for any A.Y after the expiry of 4 years from the end of the relevant A.Y, unless any income chargeable to tax has escaped the assessment for such A.Y by reasons of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that A.Y. In the present case, going by the reasons recorded by the Assessing Officer for reopening of the assessment, the Assessing Officer has considered very same material which was furnished by the assessee during the original assessement proceedings u/s 143(3) of the Act for formation of reasonable belief of escapement of income. From the above, it is undisputedly clear that the Assessing Officer has failed to make out a case of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that A.Y. Therefore, in my considered view as per first proviso of section 147 of the I.T. Act, 1961, when the assessment is reopened beyond 4 years from the end of the relevant A.Y, the Assessing Officer should make out a case that there is a failure on the part of the assessee to disclose necessary information. In the present case, the Assessing Officer has reopened the assessment on the basis of material available with the assessment folder and submitted by the assessee during the original assessement proceedings and thus, in my considered view the reopening of the assessment is bad in law and liable to be quashed. Thus, I quash the reopening of the assessment and consequent assessment

The assessee has challenged the addition made by the Assessing Officer towards cash deposit u/s 68 of the I.T. Act, 1961 on merit. Since I have quashed the re-assessment order passed by the Assessing Officer u/s 144 r.w.s. 147 of the I.T. Act, 1961, the ground taken by the assessee become infructuous and thus,, the ground taken by the assessee has been dismissed as become infructuous.

In the result, appeal filed by the assessee is allowed.