2023 (5) TMI 791 - AT - Income Tax

Reopening of assessment u/s 147 - period of limitation - return was already scrutinized u/s 143(3) and the reopening exercise has been undertaken beyond 4 years - LTCG undisclosed - HELD THAT - As one of the essential requirements is that there should be failure on the part of the assessee to disclose fully and truly all material facts necessary for her assessment for impugned assessment year. During the course of original assessment proceedings AO vide notice required the assessee to file purchase and sale deed of Kanathur property. The same was duly furnished by the assessee along with computation of Long-Term Capital Gains. The other details as called for by Ld. AO were also furnished by the assessee - Considering the same the assessment was framed on the assessee making certain additions. Thus it was a case wherein there was no failure on the part of the assessee to disclose material facts necessary for her assessment. Therefore applying the case of Foramer France 2003 (1) TMI 101 - SC ORDER it was to be held that notice issued u/s 148 was barred by limitation and consequential assessment framed by Ld. AO would be nullity. The decision of Pr. CIT vs. S. Chand Co. Ltd. 2018 (11) TMI 1067 - SC ORDER also supports the proposition that reassessment proceedings merely at the behest of audit objection as based on mere appraisal of the same record without any tangible material or information would be bad in law. In the present case we find that there is no independent application of mind by Ld. AO while recording the reasons for reopening. There is no new tangible material to reopen the case. Therefore the assessment was to be held as bad-in- law. Decided in favour of assessee.

Summary

Issues involved:
The judgment involves issues related to the validity of reassessment proceedings and challenges to quantum additions on merits.

Validity of reassessment proceedings:
The appeal by the assessee for Assessment Year (AY) 2012-13 contested the order of the Commissioner of Income Tax (Appeals) and challenged the additions made during reassessment. The assessee argued that the assessment was reopened solely based on an audit objection, without independent inquiries by the Assessing Officer. The appellant contended that all material facts were disclosed during the original assessment proceedings, and the reopening of the assessment after the expiry of four years from the relevant assessment year was unjustified. The Tribunal noted a delay in the appeal, which was attributed to the Covid-19 lockdown situation and the appellant being a senior citizen. After considering these factors, the Tribunal condoned the delay and admitted the appeal for adjudication on merits.

Quantum additions on merits:
The original return of income filed by the assessee was scrutinized under section 143(3), but the case was later reopened beyond four years from the end of the relevant assessment year. The Assessing Officer alleged that certain income items were omitted by the assessee, including Long Term Capital Gains and rental income. The assessee objected to the reopening, arguing that all material facts were disclosed during the original assessment. Despite the objections, the Assessing Officer made additions to the income during the reassessment. The Tribunal observed that the reassessment proceedings were initiated based on a revenue audit objection without any failure on the part of the assessee to disclose material facts. As per legal precedents cited, the Tribunal held that the reassessment was not valid as there was no new tangible material to reopen the case, rendering the assessment as bad-in-law. Consequently, the appeal was allowed, and the assessment was deemed null and void.

Separate Judgment:
The Tribunal, comprising Hon'ble Shri Manoj Kumar Aggarwal and Hon'ble Shri Manomohan Das, Judicial Member, pronounced the order on 17th May 2023.