Navadurga Transport Company Vs ITO (ITAT Hyderabad)
Hyderabad ITAT Upholds Reopening u/s 147 but Sets Aside Quantum for Fresh Verification & Removes 60% Tax u/s 115BBE for AY 2017-18:
Hyderabad Tribunal examined
(i) the validity of reassessment u/s 147 &
(ii) applicability of the special tax rate u/s 115BBE.
The case was reopened based on NMS data showing deposits of Rs. 2,54,59,579/- in the firm’s bank account though no return was filed. Assessment was completed u/s 147 r.w.s 144/144B treating the entire deposit as unexplained money u/s 69A.
Before CIT(A), Assessee argued that these receipts were already taxed in the hands of Smt. Anita Upadhyay, the continuing partner who took over the business upon dissolution of the firm in 2002. CIT(A), exercising new powers under s.251(1)(a), set aside the matter to AO to verify this claim, while upholding the jurisdiction u/s 147.
Tribunal first rejected the plea of non-service of notice u/s 148. Since Assessee participated in assessment proceedings, s.292BB deemed the notice validly served. No objection was raised prior to completion of assessment; hence the challenge to service was barred. On the question of reopening, Tribunal held that AO only needs prima facie material to form a belief of escapement; depositing Rs.2.54 crore without filing return constituted sufficient basis. Relying on Raymond Woollen Mills (SC), Tribunal upheld the initiation of proceedings u/s 147.
