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

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

“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”).

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.

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).

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.

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.

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