Viraj Profiles Limited Vs DCIT (ITAT Mumbai)
ITAT extracted the fourth proviso to sec. 153A of the Act in the preceding paragraph. A careful perusal of the above said proviso would reveal that, in order to invoke the fourth proviso to sec.153A, it is required to be shown by the AO that
- the books of account or other documents or evidence in his possession reveal that the income which has escaped assessment for the relevant assessment year is “in the form of asset”
- the quantum of income so escaped amount to fifty lakhs or more in the relevant assessment year or in aggregate in the relevant assessment years.
- the said income should have escaped assessment for such year or years.
- the search is initiated on or after 1stday of April, 2017.
- the relevant assessment year is the year preceding the year of search which falls beyond six preceding assessment years but not later than ten assessment years.
Hence, it is required to be shown by the AO that the escaped income was “in the form of asset” and further the value or aggregate value of assets has exceeded Rs.50.00 lakhs. The corollary is that, if the escaped income is not represented “in the form of asset”, the fourth proviso to sec. 153A of the Act cannot be invoked in order to reopen the assessment of a year falling beyond six assessment years preceding the year of search.
In the instant case, we notice that the AO has not shown that the alleged income escaped for assessment is represented “in the form of an asset”. What is assessed in this year u/s 153A of the Act is the addition towards alleged bogus purchases and disallowance of salary/professional fee u/s 37 of the Act. It is not shown that the income, if any, generated out of these two disallowances is represented in the form of asset. Hence, we are of the view that the AO could not have invoked the fourth proviso to sec. 153A of the Act in order to reopen the assessment of AY 2011-12 and accordingly hold that the said reopening is not in accordance with the law and is liable to be quashed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The cross appeals filed by parties relate to the assessment year 201112 and they are directed against the order passed by Ld CIT(A)-51, Mumbai.
2. The assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition relating to bogus purchases and fully confirming the addition of professional fee paid to Ms Ramita Jam, daughter of CFO of assessee company. The revenue is aggrieved by the decision of Ld CIT(A) in granting partial relief to the assessee in respect of addition relating to bogus purchases. The assessee has also raised a legal ground challenging the reopening of assessment of AY 2011-12.
3. The facts relating to the case are discussed in brief. The assessee is engaged in the business of manufacture and sale of stainless steel products. A search and seizure action was carried in the hands of the assessee and its associates on 13.7.2017. Consequent thereto, the assessments of the assessment years 2012-13 to 2017-18 were completed by the AO u/s 153A r.w.s 143(3) of the Act. The present assessment year, viz., AY 2011-12 falls beyond the period of six years mentioned in 153A(1) of the Act. However, the AO can reopen the assessment of any year beyond the period of six years u/s 153A of the Act by invoking the fourth proviso to sec. 153A(1) of the Act.
4. The assessee has raised a legal ground challenging the jurisdiction of the AO in reopening the assessment by invoking the fourth proviso to sec. 153A(1) of the Act. The said proviso reads as under:-
“Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless—-
