Karan Khurana Vs ITO (ITAT Delhi)
Conclusion: AO had recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It made clear that there was a total non-application of mind on the part of AO while recording the reasons for reopening of the assessment. The reasons failed to demonstrate the live link between the alleged tangible material and the formation of belief that income chargeable to tax had escaped assessment. Thus, reopening of the assessment was invalid and bad in law.
Held: In the present case, AO recorded wrong facts on many count in the reasons recorded for reopening of the assessment i.e. AO recorded incorrect amount of Rs. 58,40,171/- credited in HSBC account, Noida despite he had admitted in the assessment order that it was Rs. 30,74,006/-. AO in the reasons also recorded incorrect fact that no assessment had been completed in this case u/s 143(3) but in the reason itself AO recorded that earlier reassessment had been done u/s 147/148 read with section 143(3). AO also incorrectly recorded that sanction for reopening of assessment was required under proviso to section 151(1) despite such proviso did not exist in the statute as it was amended in 2015. AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It made clear that there was a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. The reasons failed to demonstrate the live link between the alleged tangible material and the formation of belief that income chargeable to tax had escaped assessment. Thus, reopening of the assessment was invalid and bad in law and that sanction/approval granted was also without any application of mind. Thus, the reopening of the assessment could not be sustained in law.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)- 16, New Delhi, Dated 07.01.2019, for the A.Y. 2010-2011, on the following grounds :
1. The Ld CIT(A) has erred both in law and in facts of the case in upholding the reassessment proceedings and consequential reassessment order on the ground that impugned reassessment order has been passed without providing copy of reasons recorded along with satisfaction note of approving authority u/s 151 of IT Act despite specific request made by the appellant during assessment proceedings. Therefore, the resultant order of reassessment is non-est and need to be quashed.
2. The impugned reassessment is invalid and without jurisdiction as the said assessment is completed without complying with legal requirements of the provisions of section 147/148 of the Income Tax Act therefore such assessment is void ab initio and liable to be quashed.
3. The Ld. CIT(A) has erred both in law and circumstances of the case in upholding the reassessment proceedings initiated u/s 147 of the IT Act without application, of mind on the material, if any, provided by the Inv. Wing of the department. In view of the above defects in the compliances the resultant reassessment proceedings are required to be set aside.
4. The Ld. CIT(A) has erred both in law and in facts of the case in upholding the impugned assessment order need to be set-aside as the satisfaction recorded by the Pr CIT-i 6, New Delhi is mechanical and without application of mind as such approval vitiates the assessment.
5. The Ld. CIT(A) has erred both in law and in facts of the case in upholding the impugned reassessment proceedings and the consequential reassessment order on the ground that the reassessment proceedings in the present case is covered by proviso to sec i47 and there is no allegation in the reason recorded reproduced in the assessment order by the assessing officer that there is failure of the appellant in disclosing fully and truly all material facts.
6. The Ld. CIT(A) has erred both in law and in facts of the case in upholding lie reassessment proceedings and consequential reassessment order on the ground that AO has failed to issue a valid notice u/s 148 within the time limit prescribed u/s 1 49(1)(b) of the 11 Act as the notice has been issued on 01.04.2017 whereas the limitation has expired on 31.03.2017. Therefore, the reassessment proceedings / reassessment order both need to quashed.”
2. We have heard the Learned Representative of both the parties and perused the material available on record.
3. The Ld. D.R. contended that some of the above grounds now raised before the Tribunal were not raised before the Ld. CIT(A), therefore, the same cannot be considered for disposal of the appeal.
4. On the other hand, Learned Counsel for the Assessee submitted that all the grounds are legal in nature and arise out of the record. Learned Counsel for the Assessee also submitted that the Ld. CIT(A) at the appellate stage called for the remand report and decided the above grounds. Therefore, the contention of the Ld. DR has no merit and the same may be dismissed and appeal of assessee may be decided on merits on the grounds raised above.
5. We have considered the rival submissions and do not find any force in the objection of the Ld. D.R. The grounds of appeal raised by the assessee in the present appeal are legal in nature and all the material and facts are available on record which are undisputed also. The Hon’ble Punjab & Hayana High Court in the case of VMT Spinning Co. Ltd., vs., CIT & Another [2016] 389 ITR 326 [P&H] considering the Judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT [1998] 229 ITR 383 (SC) held as under:
“Held, that the Tribunal could decide the appeal on a ground neither taken in the memorandum of appeal nor by seeking its leave. The only requirement was that the Tribunal could not rest its decision on any other ground unless the party who might be affected had sufficient opportunity of being heard on that ground. Therefore, the
Tribunal ought to have exercised its discretion in view of the fact that the assessee intended raising only a legal argument without reference to any disputed questions of fact. Since there were no additional evidence required for the decision on the new ground raised by the assessee and such question arose from the facts which were already on the record of the assessment proceedings and since a decision upon the new ground raised by the assessee would only help in determining the assessee’s correct tax liability, the matter could be remanded to the Tribunal for adjudicating upon the additional ground on its merits. [Matter remanded].”
5.1. We also find that the Ld. CIT(A) called for the remand report from the A.O. and decide the issues as well. Considering the above facts, we reject the contention of the Ld. D.R. and proceed to decide the appeal on the points raised/arguments advanced by the assessee on the above
6. Briefly the facts of the case are that original assessment in this case was completed under section 147/ 143(3) of the I.T. Act, 1961 on 24.02.20 14 at an income of Rs. 1,37,43,790/-. Subsequently proceedings under section 147 of the I.T. Act, 1961 were again initiated and notice under section 148 of the I .T. Act, 1961 Dated 31.03.2017 was issued by 1T0, Ward 47(1), New Delhi. In response to which, the assessee filed return of income on 29.04.2017 declaring an income of Rs. 1,37,43,790/-. The A.O. issued statutory notices and discussed the case with the Counsel for Assessee. The A.O. also noted in the assessment order that reasons recorded for initiating proceedings under section 147 of the I.T. Act, 1961 were duly provided to the assessee. The A.O. reproduced the reasons recorded for reopening of the assessment as under:
“Reasons to believe in the case of M/s Lakshmi tex
processors (Prop. Sh. Karan khurana
PAN: AGDPK4271C forA.Y2010-11
An information has been received from the office of Dy. Director of income tax (Investigation)-II, Ghaziabad that the assessee has deposited an amount of Rs.58,40, 171/- during assessment year 2010-11 in account of the assessee as per following details:
