DCIT Vs Paveljeet Singh Ruppal (ITAT Delhi)
The Assessing Officer has to demonstrate from the records that there has been a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Here in this case, the assessee has duly disclosed the factum of total secured loan, total interest claimed, total advances given, etc. All these facts were duly available on the record at the time of original assessment proceedings. The ‘reasons recorded’ itself speaks that the point on which Assessing Officer has sought to raise, already stood disclosed in the profit and loss account and nothing has been found which has not been disclosed. If the assessee has disclosed all the material facts necessary for the assessment in his return of income and in the audited financial statement, then the legal inference which has to be drawn is upon the Assessing Officer and not upon the assessee. The 1st proviso to section 147 puts embargo of time limit of four years from the end of the relevant assessment year where assessments have been done under section 143(3), if the twin conditions provided therein are not met. The said proviso is an explicit safeguard which prohibits the Assessing Officer from exercising the power to re-assess where the assessment has already been completed u/s. 143(3). If is there any over sight or inadvertent mistake of the Assessing Officer in the original assessment proceedings which has been discovered by him later on reconsideration of same material, then it tantamount to ‘change of opinion’, more so in cases where the reopening is hit by first proviso to Section 147 (supra). In such cases, law does not permit the Assessing Officer to reopen a concluded assessment after expiry of 4 years from the end of the relevant assessment year like in the present case.
Further, Hon’ble Jurisdictional Delhi High Court in the case of Oracle India Pvt. Ltd. vs. ACIT, as reported in (2017) 397 ITR 480 (Del), held that where audited accounts were already available with the Assessing Officer and form part of the assessment record, then merely suggesting that there was failure on the part of the assessee to compute and declare the true taxable income without further clarification would not justify reopening of the assessment after the limitation period of four years. 10. The aforesaid judgments in principle will apply mutatis mutandis on the present ‘reasons’ also, because here in this case there is no element of lack of true and full disclosure on the part of the assessee and the reasons are based on the material which was already on record. Thus, such a reason cannot clothe the Assessing Officer with the jurisdiction to reopen the assessment after the expiry of four years from the end of the relevant assessment year, merely on bald observation that there was failure on the part of the assessee to compute and declare the true taxable income .
Ld. CIT (A) has taken note of all these facts and after relying upon the principle laid down by the Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561, held that the reopening has been done merely on “change of opinion” and Assessing Officer has no power to review the earlier assessment. The aforesaid finding of the ld. CIT (A) is both factually and legally correct and no interference is called for. Accordingly, we hold that reassessment proceeding u/s 147 vide notice dated 17.03.2015 u/s 148 is bad in law and void ab initio and secondly the entire reassessment proceedings is quashed. 12. In the result, the appeal of the Revenue is dismissed
FULL TEXT OF THE ORDER OF ITAT DELHI
The aforesaid appeal has been filed by the Revenue against the impugned order dated 14.12.2017 by ld. Commissioner of Income Tax (Appeal)-XVIII, New Delhi for the quantum of assessment passed u/s.147/148 for the Assessment Year 2008-09. In the grounds of appeal, the Revenue has raised following grounds:
“(I) On the facts and in the circumstances o the case and in law, the ld. CIT(A) has erred in quashing the reopening of the assessment proceedings u/s 147 of the Act by ignoring the fact that, the case for AY 2008-09 was reopened by the AO citing that the addition made on same issue in case of the said assessee for AY 2009-10 which was sustained by Ld. CIT(A).
(II) On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in quashing the reopening of the assessment proceedings u/s 147 of the Act by ignoring the decision of Apex Court in the case of CIT vs. PVS Beedies Pvt. Ltd. whereby it is held that “Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law.”
(III) The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing.”
2. The facts in brief are that the assessee had filed his return of income on 30.09.2008 on a total income of Rs.1,71,40,407/-. Thereafter, the assessee’s case was selected for scrutiny and assessment order was passed u/s.143(3) vide order dated 16.12.2010, after making additions on account of ad hoc disallowance of expenses and additional demand of income claimed by the appellant in the Profit and Loss Account. Income was finally assessed at Rs.1,82,73,260/-. After completion of the assessment in the aforesaid manner and after expiry of four years from the relevant assessment year, the assessee’s case was reopened u/s.147 by the issuance of notice u/s 148 dated 17.03.2015, after recording the following reasons:
“The assessment in this case was completed u/s. 143(3) on 16.12.2010 at an income of Rs.1,82,73,260/-. On examination it is found that the assessee had taken secured loan of Rs.4,09,54,814/- and claimed a total interest including bank charges of Rs.1,46,70,857/- .
Further, the assessee had given total loans and advances of Rs. 3,63,80,734/- to its sister concern. On perusal of record of date, it is observed that it is a case of funding of sister concern at the cost of assessee. It is important to mention that this issue came up for detailed discussion during the proceedings for A.Y. 2009-10. After examining the issue at length, Ld. Assessing Officer vide his an order dated 11.12.2011 came to conclusion that proportionate disallowance of interest to the tune of rs. 23,15,181/- is to be made to that assessment year. The CIT(A) has also sustained the said addition on the issue vide order date 06.11.2013.
On examination of the records available before me, I find that in this year also the proportionate interest claimed on secured loan is not an allowable expenditure as per the calculation below:
