9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (4) TMI 863 - AT - Income TaxReassessment Proceedings by the AO u/s 147 - Original assessment was made u/s 143(3) and reopening of the assessment has admittedly taken place beyond a period of four years from the end of the relevant assessment year. AO stated that he has reason to believe that the income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Thus he wants to initiate reassessment proceedings u/s 147 - HELD THAT - Expression u/s 147 is reason to belief such a belief may not be based merely on reasons but it must be founded on information. AO has failed to establish that the assessee did not disclose all material facts at the time of making the original assessment u/s 143(3). Also initiation of reassessment proceedings by the AO is barred by limitation thus invalid. Decision in the cases of BAWA ABHAI SINGH VERSUS DEPUTY COMMISSIONER OF INCOME-TAX 2001 (3) TMI 14 - DELHI HIGH COURT and INCOME-TAX OFFICER I WARD DISTT. VI CALCUTTA AND OTHERS VERSUS LAKHMANI MEWAL DAS 1976 (3) TMI 1 - SUPREME COURT relied upon.
Issues Involved:
1. Validity of reopening the assessment under Section 148 of the Income Tax Act, 1961. 2. Alleged failure of the assessee to disclose fully and truly all material facts necessary for assessment. 3. Alleged bogus purchases amounting to Rs. 3,11,25,000/-. Issue-wise Detailed Analysis: 1. Validity of Reopening the Assessment under Section 148 of the Income Tax Act, 1961: The assessee contended that the reopening of the assessment after more than five years from the end of the assessment year 2003-04 was invalid as there was no failure on their part to disclose fully and truly all material facts necessary for assessment. The reopening was based on the statement of a third party, Shri Mukesh Choksi, who admitted to providing bogus bills and share capital entries through various companies, including Talent Infoway Ltd. The Tribunal noted that the original assessment was completed under Section 143(3) of the Act, and all necessary details were provided by the assessee during the original assessment. The Tribunal further observed that the statement of Shri Mukesh Choksi did not specifically mention the assessee or the transactions in question. The Tribunal held that the Assessing Officer (AO) initiated reassessment proceedings based on suspicion and without any specific material evidence linking the assessee to the alleged bogus transactions. Consequently, the Tribunal concluded that the initiation of reassessment proceedings was not valid and was barred by limitation as per the proviso to Section 147 of the Income Tax Act. 2. Alleged Failure of the Assessee to Disclose Fully and Truly All Material Facts Necessary for Assessment: The Tribunal observed that during the original assessment, the assessee had provided all necessary details regarding purchases and sales, including party-wise details, addresses, and other relevant information. The AO had verified these details before completing the assessment under Section 143(3). The Tribunal referred to the decision of the Hon'ble Apex Court in the case of ITO vs. Lakhmani Mewal Das, which stated that the duty of the assessee is to make a true and full disclosure of primary facts. The Tribunal held that the assessee had fulfilled this duty, and the AO's belief that income had escaped assessment due to the assessee's failure to disclose material facts was not justified. The Tribunal emphasized that there must be a direct nexus between the material before the AO and the belief of escapement of income, which was missing in this case. 3. Alleged Bogus Purchases Amounting to Rs. 3,11,25,000/-: The AO had made an addition of Rs. 3,11,25,000/- to the assessee's income on account of alleged bogus purchases from Talent Infoway Ltd., based on the statement of Shri Mukesh Choksi. However, the Tribunal noted that the statement did not specifically mention the assessee or the transactions in question. The Tribunal also considered the invoices and other documents provided by the assessee, which indicated that the purchases were genuine. Since the Tribunal held that the initiation of reassessment proceedings was not valid, it did not find it necessary to adjudicate on the issue of the genuineness of the purchases. Conclusion: The Tribunal allowed the appeal of the assessee in part, holding that the initiation of reassessment proceedings by the AO was not valid and the assessment order was quashed. The Tribunal did not adjudicate on the issue of the genuineness of the purchases due to the invalidity of the reassessment proceedings. The appeal was pronounced in the open court on 17th April, 2013.
|
