M/S VAISH ASSOCIATES,NEW DELHI vs. ACIT, NEW DELHI

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ITA 1380/DEL/2013Status: DisposedITAT Delhi05 October 2015AY 2004-054 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that all material facts were disclosed by the assessee during the original assessment and there was no failure to disclose fully and truly. The reopening was based solely on a change of opinion, making the invocation of Section 147 incorrect.

What were the facts?

The assessee's original assessment was framed under Section 143(3). The Assessing Officer reopened the assessment under Section 147 based on a change of opinion regarding renovation expenses, alleging they should have been disallowed as capital expenditure. The assessee contended that all material facts were disclosed during the original assessment.

What were the issues?

Whether the reopening of assessment under Section 147 was valid when based on a mere change of opinion and without any failure on the part of the assessee to disclose material facts.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL

Before: SHRI G.C. GUPTA & SHRI SHRI PRASHANT MAHARISHI SHRI SHRI

For Appellant: Shri Rohit Jain, Advocate
For Respondent: Shri J.P. Chandrekar, Senior DR
Hearing: 08.09.2015Pronounced: 05.10.2015

PER G.C. GUPTA PER G.C. GUPTA, VP PER G.C. GUPTA PER G.C. GUPTA , VP , VP : , VP This appeal by the assessee for the assessment year 2004-05 is directed against the order of learned CIT(A)-XXVIII, New Delhi dated 4th January, 2013.

2.

The grounds of appeal No.1 to 1.5 of the assessee are as under:-

1.

“1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals)(“the CIT(A)”) erred in upholding the jurisdiction of the Assessing Officer to reassess the income of the appellant under section 147 of the Income-tax Act, 1961 (“the Act”).

1.1 That on the facts and circumstances of the case and in law, the CIT(A) erred in not holding that reassessment order dated 28.12.2011, passed by the Assessing Officer under section 147 of the Act, was without jurisdiction, bad in law and void ab initio.

2 ITA-1380/Del/2013

1.2 That on the facts and circumstances of the case and in law, the CIT(A) erred in not holding that the reassessment was barred by limitation, in view of the fact that (i) the original assessment had been framed under section 143(3) of the Act and (ii) there was no failure on the part of the appellant to disclose fully and truly all material facts relevant for the assessment of the appellant’s income.

1.3 That on the facts and circumstances of the case and in law, the CIT(A) erred in failing to appreciate that the reassessment, being based on mere change of opinion, was bad in law.

1.4 That on the facts and circumstances of the case and in law, the CIT(A) erred in not quashing the reassessment on the ground that the same had been initiated at the dictates of the audit party and that the Assessing Officer had, in writing, disputed the audit objection raised by the audit party.

1.5 That on the facts and circumstances of the case and in law, the CIT(A) erred in not holding that reassessment order passed by the Assessing Officer was beyond jurisdiction since the reasons recorded for reopening were communicated to the appellant after the statutory period of six years.”

3.

Learned counsel for the assessee submitted that the original assessment in this case was framed u/s 143(3) of the Income-tax Act, 1961 and, after the period of four years, the assessment was reopened u/s 147 of the Act by issue of notice u/s 148 on mere change of opinion. He referred to the copy of the reasons recorded for reopening the assessment as recorded by the Assessing Officer which have been filed in the compilation at page 9 thereof which shows that the only reason for reopening the assessment was that the assessee has claimed expenditure on account of renovation and repairs, out of which, `39.34 lakhs were incurred on renovation and should have been disallowed at the time of assessment and added back to the income of 3 ITA-1380/Del/2013 the assessee. Learned counsel for the assessee submitted that complete details of these expenses on account of renovation and repairs of the premises have been filed before the Assessing Officer and there was no failure to disclose the material facts before the Assessing Officer at the time of original assessment.

4.

Learned DR has opposed the submissions of the learned counsel for the assessee. He referred to page 2 of the assessment order in support of the case of the Revenue that no bills for renovation expenses were submitted by the assessee and that these were clearly capital in nature and should have been added as income in the hands of the assessee. He relied on the order of the Assessing Officer and the learned CIT(A).

5.

We have heard the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A) and also the details of the expenditure incurred on account of renovation and repairs. We find that all material facts were disclosed by the assessee at the time of original assessment and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year. We have perused the copy of the reasons recorded by the Assessing Officer while reopening the assessment u/s 147 of the Act and we find that the reasons recorded clearly show that it was merely based on change of opinion only. We find that in the reasons recorded for reopening of assessment, there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the relevant assessment year. We find that the assessee has filed copy of the renovation ledger account in the books of the assessee along with copy of invoices supporting renovation expenses incurred during the relevant period. The assessee was 4 ITA-1380/Del/2013 running his professional firm in rented premises. In the facts of the case, we are of the view that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the relevant assessment year and, accordingly, we hold that the provision of Section 147 of the Act was wrongly invoked in this case. Accordingly, ground Nos.1 to 1.5 of the assessee’s appeal are allowed.

6.

In view of our holding that reopening in this case u/s 147 was bad in law, and consequently, cancelling the reopening of assessment u/s 147of the Act, the other grounds of appeal raised by the assessee are not adjudicated upon.

7.

In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 5th October, 2015.

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