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The Asstt. Commissioner of Income Tax, Central Circle-IV (2) , Chennai Versus M/s. S. & P Foundation Pvt Ltd

2015 (6) TMI 283 - ITAT CHENNAI

Reopening of assessment - assessee challenged the issue of notice u/s.148 in respect of assessment completed u/s. 153A - Held that:- Proceeding initiated u/s. 153A for all six years shall become a subject matter to assessment u/s.153(A) of the Act and the Assessing officer shall have freehand, on assessment, only on the proceeding that are pending to frame the assessment afresh. But in the case where the proceedings have reached finality, the assessment u/s.153A r.w.s.143(3) and where certain ma .....

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ere he has clubbed two sets of income, return income and unearthed income, had arrived at the total income. Thereafter, if he had a reason to believe the said assessment can be re-assessed u/s.148 of the Income Tax Act as discussed in the earlier paras so as to reopen the assessment, there should be sufficient materials.

There is no arbitrary power to the Assessing Officer to reopen on the basis of change of opinion. In the present case we have gone through the reasons for reopening o .....

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e material" to come to the conclusion that there is escapement of income from assessment. The reason must have live link with the foundation of belief. In the present case, the Assessing Officer considered seized material No.136 in annexue NSK/B & D/S dated 20.02.2008 and also seized material document NSK/B & D/S dated 20.02.2008 while framing original assessment and arrived the value of property at ₹ 1,56,65,000/-. Thereafter, the Assessing Officer considered the same seized material to a .....

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kateswara Rao, CIT For the Respondent : Shri G Baskar, Adv. ORDER Per: Chandra Poojari, Accountant Member The appeal by Revenue and Cross-objection by assessee are directed against the order of Commissioner of Income Tax (Appeals)-II, Chennai dated 28.03.2014. The Revenue has raised the following grounds:- 1. "On the facts and the circumstances of the case, the ld. CIT(A) erred in holding that the re-assessment order is not valid and thereby has wrongly deleted the addition made in the said .....

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ith the explanation of the assessee filed before the Assessing Officer on 23.12.2009, it is evident that the said seized material points to a consideration of ₹ 1,81,27,940/- while the explanation dated 23.12.2009 is offered only for ₹ 1,56,65,000/- leaving the balance of ₹ 24,62,840/- c. By virtue of the above position, the assessee's balance of amount of ₹ 24,62,840/- has gone unexplained and thus unassessed in the original assessment. Hence, the order of the CIT(A) .....

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sec. 147 r.w.s. 149(1)(b) provides a time limit of 6 years from the end of the assessment year as is the case in the re-opening." 2. Since the issue raised in the Cross-objection is against the root of the matter which is being legal issue, first we take up Cross objection for adjudication. 3. The brief facts of the case are that there was a search in the case of the assessee and assessment u/s. 153A r.w.s.143(3) of the Income-tax Act, 1961 was completed on 31.12.2009 determining income of .....

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accordingly, notice u/s. 143(2) and notice u/s. 142(1) of the Income-tax Act were issued on 04.12.2012. Consequently, reassessment order was passed, wherein it was observed by the Assessing Officer that sale value of the property as per seizure document No.136 in annexure NSK/B&D/S dated 20.02.2008, it would works out to ₹ 1,81,27,940/- as against the sale of value of property admitted by assessee at ₹ 1,56,65,000/-. Accordingly, the Assessing Officer added an amount of ₹ .....

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the original assessment order dated 31.12.2009. I find the submissions of the appellant to be correct that the Assessing Officer while passing the original assessment under section 153A read with section 143(3) the Assessing Officer has considered the seized material and after considering the same & appellant's submissions only he has passed the assessment order on the issue under consideration. Therefore, the reopening of assessment on the basis of same seized material, that had been co .....

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rs from the end of the assessment year under consideration and there being no failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment for that assessment year. The reopening and the addition made to the income of the appellant in the reassessment made by the Assessing Officer is based on the same seized material that was considered by him in the original assessment made under section 153A read with section 143(3) which amounts to change of .....

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the other grounds raised by the appellant on the merits of the additions made. In the result, the appeal is allowed". 5. Against this findings of the CIT(A), the Revenue is in appeal before us. In Cross-objection the assessee challenged the issue of notice u/s.148 of the Income Tax Act in respect of assessment completed u/s. 153A of the Income-tax Act. 6. The ld. counsel for the assessee supported the order of the Commissioner of Income Tax (Appeals) cancelling its re-assessment order as it .....

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ction of Section 153A and 143(3) r.w.s. 147 of the Income Tax Act. For this purpose, he relied on the order of the Tribunal in the case of State Bank of India vs. Deputy Commissioner of Income Tax 22 ITR (Tri) 609 (Mumbai). 7. Further, the ld. counsel submitted that the Assessing Officer has no jurisdiction to issue notice u/s. 148 of the Act in respect of those six assessment years which falls within the exclusive jurisdiction of section 153A of the Act. He also relied on the judgment of Madhya .....

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e submitted that provisions of sections 147 and 148 would apply to the assessment for the block period made under Chapter XIVB and relied on the judgment of CIT vs. Peerchand Ratanlal Baid (HUF) 322 ITR 544 (Gauhati) wherein it was held that the addition of ₹ 13,66,715/- to the undisclosed income of the assessee for the block period could have been made only by giving a notice under section 148 of the Act and no such notice having been given the provisions of Section 153 of the Act would o .....

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SK/B&D/S, dated 20.02.2008, the value of property situated at survey No.176/02, Nolambur is worked out at ₹ 1,18,73,840/- and other property as per seized document No.136 annexure NSK/B&D/S, dated 20.02.2008, situated at New survey No.72, at Nolambur vide sale deed No.2653 dated 23.05.2005 valued at ₹ 62,54,100/-. Thus total value worked out at ₹ 1,81,27,940/-. However, the assessee disclosed the value of the property at ₹ 1,56,65,000/-. Hence, the Assessing Offic .....

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s counsel Section 147 of the Act permits reassessment of income that has escaped assessment income in any assessment year subject to provisions of sections 149 and 153 of the Income tax Act. Reassessment of escaped income under section 147 of the Act is made where income chargeable to tax has escaped assessment either due to the failure of the assessee to file return or failure to disclose fully and truly all material facts for the purposes of assessment or where material already on record had n .....

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e for any assessment year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the A .....

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initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. 12. The s .....

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essing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice u .....

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g Officer is free to initiate proceeding under Section 147. 13. In the present case, in our opinion, we cannot say that there is no reason to reopen the assessment. Being so, we cannot uphold the argument of the assessee's counsel that issue of notice u/s. 148 is bad in law. The assessee's counsel relied on the judgment of the Madhya Pradesh High Court in the case of Ramballabh Gupta wherein it was held that notice u/s. 148 of the Act can be issued to six assessment years which fall sect .....

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raid, section 148 has no application by virtue of the overriding effect contained in section 153A of the Act. Thus, it does not mean that assessment completed under section 153A r.w.s.143(3) cannot be subject to re-assessment. 14. While the ld. counsel for the assessee relied on the order of the Tribunal in the case of State Bank of India (Mumbai) cited supra in that case held that: That the original assessments for the assessment years in question were completed u/s.143(3) on February 13, 2004 .....

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and accordingly the Assessing Officer was not justified in issuing notices u/s. 148 and in completing the assessments u/s.143(3) read with section 147 of the Act on October 31, 2006. The Assessing Officer instead of complying with the requirement of section 153A proceeded with the provisions of sections 147 and 148 which were not applicable in the assessment under section 153A of the Act. Therefore, the assessments completed u/s.143(3) read with section 147 of the Act were wholly without jurisd .....

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dismiss this ground raised by the assessee. 17. The second issue in Cross-objection is with regard to fact that assessment is only change of opinion. 18. The ld. counsel for the assessee submitted that in the case of assessment order u/s.153A r.w.s. 143(3) dated 31.12.2009 passed by the Assessing Officer for analyzing the material seized during the search, he has considered all the material for the purpose of assessment and there was no escapement of income. According, to the ld. counsel only f .....

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f the assessee including undisclosed income where action have been taken against the assessee u/s.132(1) of the Act. Proceeding initiated u/s. 153A for all six years shall become a subject matter to assessment u/s.153(A) of the Act and the Assessing officer shall have freehand, on assessment, only on the proceeding that are pending to frame the assessment afresh. But in the case where the proceedings have reached finality, the assessment u/s.153A r.w.s.143(3) and where certain material document .....

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ed two sets of income, return income and unearthed income, had arrived at the total income. Thereafter, if he had a reason to believe the said assessment can be re-assessed u/s.148 of the Income Tax Act as discussed in the earlier paras so as to reopen the assessment, there should be sufficient materials. 20. There is no arbitrary power to the Assessing Officer to reopen on the basis of change of opinion. In the present case we have gone through the reasons for reopening of assessment. It cannot .....

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