THE ITO, (EXEMPTIONS), BHAVNAGAR vs. PNR SOCIETY FOR RELIEF & REHABILITATION OF THE DISABLED TRUST, BHAVNAGAR

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ITA 2370/AHD/2015Status: DisposedITAT Ahmedabad27 October 2017AY 2008-093 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, stating that for a valid reopening of assessment under the proviso to Section 147, the AO must demonstrate the assessee's failure to disclose material facts. This was not done in the present case.

What were the facts?

The Assessing Officer (AO) reopened the assessment for AY 2008-09 after four years. The assessee trust had disclosed all material facts during the original assessment, and the AO had not made any additions then. The CIT(A) quashed the reassessment proceedings.

What were the issues?

Whether the reassessment proceedings were validly initiated, specifically concerning the requirement for the assessee to have failed in the true and full disclosure of material facts for reopening after four years.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: Shri Pramod Kumar]

1.

This appeal, filed by the Assessing Officer, calls into question correctness of the order dated 15.05.2015 passed by the CIT(A) in the matter of assessment under Section 143(3) r.w.s. 147 of the Income-tax Act, 1961, for the assessment year 2008-09. 2. It is a case of reopened assessment and, beyond any dispute or controversy, it is a case of reopening of assessment after four years from the end of relevant assessment year. It is this backdrop that the learned CIT(A) has, in the impugned order, quashed the reassessment proceedings by observing as follows:-

“2.7 The above discussion makes it very clear that for valid reopening of assessment, which is covered with proviso to section 147, AO has to specifically mention the failure of the assessee to disclose truly and fully all material facts necessary for the assessment. In the instant case, reasons recorded as mentioned in para No.2.2 above, I do not find any reference to such failure on the part of the appellant to disclose any material facts necessary for assessment and in fact narration given in the reasons do not show any such failure which could be inferred even if not so mentioned specifically in the reasons. Perusal of assessment order dated 25/08/2010 reveals that the A.O. had assessed appellant's income without making any addition. It is also a matter of fact that the appellant had furnished details of total income as under:- DCIT v/s. PNR Society for Relief & Rehabilitation of the Disabled Trust Assessment year: 2008-09 Gross income of the trust 54738381 Actual application of income 43589035 Allowable accumulation of the Extent 15% of gross income Less: Corpus donation Gross Income 54738381 Less: Corpus donation 1427423 -------------- 53310958 15% 7996644

Corpus donation 1427423 53013102 -------------- 1725279

Out of this surplus trust has made accumulation u/s.11(2) 2000000 Leaving Net deficit of 274721

This way I am of the considered view that material fact in respect of the investment/deposit made during the year was very much on record. In view of above, I am of the firm view that the appellant had already filed material fact during the earlier assessment proceedings and the A.O. had not mentioned anything about non-filing of material fact by the appellant. Accordingly, in view of discussions, I hold that the assessment has not been reopened validly.”

3.

Aggrieved by the stand so taken by the CIT(A), the Assessing Officer is in appeal before me.

4.

Having heard the rival contentions and having perused the material on record, I am not inclined to disturb well reasoned conclusions arrived at by the CIT(A). The law is well settled that in the case of reopening of assessment covered by proviso to Section 147, as in the present case, it is condition precedent that failure on the part of the assessee in true and full disclosure, has to be demonstrated. That has not been done in the present case. There is nothing before me to show this failure. In view of these discussions, I uphold the impugned quashing of reassessment. All other issues are, therefore, rendered academic.

5.

In the result, appeal is dismissed. Pronounced in the open court today on the 27th October, 2017. Pramod Kumar (Accountant Member) Ahmedabad, the 27th day of October, 2017 **bt DCIT v/s. PNR Society for Relief & Rehabilitation of the Disabled Trust Assessment year: 2008-09 Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order

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