2010 (6) TMI 833 - AT - Income Tax

Summary

Issues Involved:
1. Reopening of assessment u/s 147.
2. Disallowance of 20% of direct and indirect expenses.
3. Addition based on survey statement.
4. Addition of security deposit in GNST.

Summary:

1. Reopening of assessment u/s 147:
The assessee challenged the reopening of assessment u/s 147, arguing that the prerequisites for reopening were not met. The Assessing Officer (A.O.) issued notice u/s 148 based on a survey u/s 133A, which revealed unaccounted shops and flats, and non-filing of returns by the assessee and associated firms. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the reopening, citing the Supreme Court decision in Raymond Woolen Mills Ltd. vs. ITO, which allows reopening if there is prima facie material. However, the Tribunal found that no addition was made in respect of the issues recorded for reopening, making the reassessment invalid and bad in law. The Tribunal quashed the reassessment orders for all years under consideration.

2. Disallowance of 20% of direct and indirect expenses:
The A.O. disallowed 20% of direct and indirect expenses for various assessment years, totaling Rs. 53,806 for AY 2000-01, Rs. 23,630 for AY 2002-03, Rs. 20,270 for AY 2003-04, and Rs. 17,240 for AY 2004-05. The CIT(A) sustained these additions. However, since the reassessment was quashed, these disallowances became infructuous.

3. Addition based on survey statement:
The assessee contended that the assessment was made based on a disclosure by the appellant's son during a survey, which was made under pressure. The CIT(A) confirmed the assessment. The Tribunal did not specifically address this issue separately due to the quashing of the reassessment.

4. Addition of security deposit in GNST:
For AY 2004-05, the A.O. added Rs. 5,00,000 based on a survey statement. The CIT(A) confirmed this addition. However, this issue also became infructuous due to the quashing of the reassessment.

Conclusion:
The Tribunal quashed the reassessment orders for all years under consideration, rendering other grounds of appeal academic and infructuous. The reassessment was deemed invalid as no addition was made in respect of the issues recorded for reopening.