2025 (7) TMI 1308 - AT - Income Tax

Reopening of assessment u/s 147 - Income has been finally settled under the Vivad Se Vishwas Scheme (VSVS) First round of reopening was made following survey u/s 133A on the business premises of the assessee wherein it was found that the assessee was engaged in providing accommodation entries AGAIN reopening of the assessment on the basis of investigation wing that assessee is a beneficiary of accommodation entry which was credited in the same bank account which has been subject matter of the scrutiny in the first reassessment proceedings HELD THAT - Once the income has been estimated on the basis of bank statement and added to the income of the assessee which was finally settled in the VSVS scheme as is apparent from form no.5 dated 16.10.2024 filed before us then no re-opening could be made on the same income. Therefore we are inclined to quash the reopening of assessment being based on the same material as it is not open to the AO to reopen the case on the basis of same material which were available at the time of original assessment and which was finally settled in VSVS Scheme. Accordingly the assessment order passed by the ld. AO is hereby quashed. Appeal of the assessee is allowed.

Summary

ISSUES:

Whether the delay in filing the appeal can be condoned on grounds of bonafide and genuine reasons.Whether the reopening of assessment under section 147 of the Income-tax Act is valid when based on the same material already considered in earlier assessment proceedings.Whether reopening of assessment is permissible after the income has been finally settled under the Vivad Se Vishwas Scheme (VSVS).Whether the addition of undisclosed income on account of accommodation entries is justified where the income has been previously estimated and assessed.

RULINGS / HOLDINGS:

The delay in filing the appeal was condoned as it was due to the assessee's inability to access the department's e-portal, constituting "bonafide and genuine reasons".The reopening of assessment under section 147 was held invalid and quashed because it was based on "the same material" that had already been examined and assessed in the original reassessment proceedings.Once the income was "finally settled in the VSVS Scheme," no further reopening of assessment on the same income is permissible.The addition of undisclosed income on account of accommodation entries was not sustained where the income was already estimated on bank deposits and subjected to reassessment and settlement under VSVS.

RATIONALE:

The Court applied the provisions of section 147 and section 148 of the Income-tax Act, 1961, which govern reopening of assessments, emphasizing that reopening cannot be based on material already available and considered in earlier proceedings.The Court relied on the principle that reopening must be justified by "new information" or "material" not previously available to the Assessing Officer.The finality of settlement under the Vivad Se Vishwas Scheme (section 5(2) of the scheme rules) was recognized as a bar to further reassessment on the same income.The Court distinguished between initial assessment and reassessment, holding that reassessment cannot be a tool for re-litigating issues already settled, especially where income was estimated and accepted under scrutiny and settlement schemes.