2025 (5) TMI 1786 - AT - Income Tax

Reopening of assessment - reasons to believe - cash payments in acquisition of capital assets/agricultural lands - reopening beyond a period of four years HELD THAT - AO had initiated the impugned reopening beyond a period of four years from the end of the relevant assessment year and therefore hit by section 147 1st proviso. Revenue seeks to buttress the point that given fact that the assessee had made the impugned cash payments in violation of section 40A(3) of the Act we ought to uphold the impugned reopening. We find no reason to sustain the impugned reopening. This is for the precise reasons that AO is himself very fair in not denying the assessee s averments/explanation that there was no failure on her part in disclosing all the relevant facts in the former round fully and truly since the reopening had been initiated because of the relevant facts emerged as per the corresponding computation and books of account only which already form part of the first-round records. Faced with this situation we quote Hindustan Lever Limited Vs. Hindustan Lever Limited Vs. R.B. Wadkar 2004 (2) TMI 41 - BOMBAY HIGH COURT settling the law in assessee s favour and against the department that such reopening reasons have to be read on standalone basis without any scope of addition/substitution therein as the case may be. We accordingly reject the Revenue s vehement contention supporting the impugned reopening in very terms since as hit by section 147 1st proviso and quash the same in very terms. Appeal of assessee allowed.

Summary

The Appellate Tribunal (ITAT Dehradun) adjudicated an appeal concerning the reopening of assessment for AY 2012-13 under sections 143(3) read with 147 of the Income-tax Act, 1961. The key issue was the validity of the reassessment initiated beyond four years from the end of the relevant assessment year, thereby invoking the first proviso to section 147.The Assessing Officer had originally assessed the income at Rs. 40,13,590/- on 26.02.2015, but subsequently issued a section 148 notice on 25.09.2017, alleging escapement of income by cash payments of Rs. 1.33 crores in acquisition of capital assets/agricultural land. The reassessment order dated 23.10.2018 added this amount, upheld by the lower authorities.The Tribunal found that the reopening was barred by the first proviso to section 147, as the Assessing Officer himself acknowledged that the assessee had disclosed all relevant facts "fully and truly" in the original return and assessment records. The purported reason for reopening arose solely from the original books of account and computation, which were already before the Assessing Officer.Relying on the precedent in Hindustan Lever Ltd. v. R.B. Wadkar (2004) 268 ITR 332 (Bom), the Tribunal held that reopening reasons must be read on a "standalone basis without any scope of addition/substitution." Consequently, the reopening was quashed as invalid.The appeal was allowed, and the reassessment order set aside. The Tribunal stated: "We accordingly reject the Revenue's vehement contention supporting the impugned reopening in very terms since as hit by section 147 1st proviso and quash the same in very terms." Remaining pleadings were rendered academic.