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2016 (7) TMI 668 - ITAT AHMEDABAD

2016 (7) TMI 668 - ITAT AHMEDABAD - TMI - Reopening of assessment - Undisclosed investment made in purchase of colour and chemical - Held that:- The information has been gathered from the record held with the department which were submitted by assessee only during regular course of assessment proceedings u/s 143(3) r.w.s. 153A of the Act and they were very much available before the ld. Assessing Officer who has thereafter framed the assessment order. Certainly there was no failure on the part of .....

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ve relief. For example the ld. CIT(A) has decided certain additions against the assessee and assessee did not file appeal against confirmation of those additions, meaning thereby that those issues have become final. They cannot be deleted by quashing the assessment order on the ground of reopening. In other words revenue cannot be put in more disadvantageous situation except dismissal of its appeal. In the appeal of revenue, respondent assessee can not get positive relief. He can only get the ap .....

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e duly given effect in the books of account maintained by assessee and there is no other evidence brought on record by the ld. Assessing Officer to prove that there was any unaccounted purchases. - Decided in favour of assessee - ITA No. 2260/Ahd/2011 - Dated:- 1-6-2016 - Shri Rajpal Yadav, JM And Shri Manish Borad, AM For the Appellant : Shri James Kurien, Sr. DR For the Respondent : Shri Hardik Vora, AR ORDER Per Manish Borad, Accountant Member This appeal of Revenue is directed against the or .....

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43(3) r.w.s 153A of the Act on a total income of ₹ 1,83,40,090/-. The matter travelled upto the Tribunal wherein vide its order in ITA Nos.2696 to 2698, 1999 to 2702/Ahd/2007 dated 15th January, 2010, total income was determined at ₹ 14,00,230/- after giving effect to the order of the Tribunal. Thereafter on the basis of office records, gathered during the course of assessment proceedings u/s 143(3) r.w.s.153A of the Act, ld. Assessing Officer observed that month-wise details of purc .....

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ssessee on 28th August, 2009 followed by notice u/s 142(1) of the Act on 9.4.2010. During the course of assessment proceedings u/s 143(3) r.w.s. 147 of the Act, ld. AR submitted that there was no unaccounted purchases but the difference of ₹ 47,59,796/- was only due to the adjustment of cenvat credit , discount, octroi and average of purchases which have all been accounted for in the regular books of account and furnished the following reconciliation statement to substantiate its contentio .....

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tal income of ₹ 14,00,227/- (post giving effect to the Tribunal s order dated 15.1.2010) and also allowed deduction of ₹ 8,27,127/- on account of loss due to fire which was wrongly denied during assessment proceedings u/s 143(3) r.w.s. 153A of the Act. Income of the assessee was assessed at ₹ 53,32,896/-. 3. Aggrieved, assessee went in appeal before ld. CIT(A) on two grounds -firstly against issuance of notice u/s 148 of the Act and challenging the validity of re-assessment pro .....

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relating to purchases and there was no unaccounted purchases made by the assessee. However, ld. CIT(A) dismissed the ground of assessee relating to reopening of assessment proceedings u/s 147 by issuance of notice u/s 148 of the Act and held that issuance of notice u/s 148 of the Act and reopening of assessment proceedings u/s 147 of the Act are valid in law. 5. Now aggrieved, Revenue is in appeal before the Tribunal raising following grounds of appeal :- [1] On the facts and circumstance of the .....

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nd that of Assessing Officer may be restored to the above extent. 6. Ld. DR submitted as follows :- 1. The Ld. CIT(A) did not appreciate the fact that during the course of assessment proceedings the assessee could not satisfactorily explain the issue of unaccounted purchase of colour chemicals. 2. The Ld. CIT(A) did not appreciate the fact that no satisfactory explanation has been furnished in as such as the evidence in respect of CENVAT availed for purchase but only produced a reconciliation be .....

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that the assessee has merely tried to cover up the mistake made during the course of earlier assessment and the purchase of colour chemicals to the extent of 47,59,796/- should be treated as unaccounted investment in the hands of the assessee. 7. On the other hand, ld. AR raised an alternate plea and challenged the order of ld. CIT(A) observing that the reopening of assessment proceedings are valid in law. The ld. AR submitted that, this alternate plea can be raised under Rule 27 of the ITAT Ru .....

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suing notice u/s 148 of the Act on 28.8.2009 i.e. after the expiry of period of four years from the end of relevant assessment year which expired on 31.3.2009 and thus the same was time barred. As the same could have been issued if the assessee had failed fully and truly to disclose all material facts necessary for assessment, which is not the fact in the present case, since the reopening has been done on the basis of erroneous understanding of the data submitted during the course of original as .....

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de in purchases of colour chemicals. On the other hand, on behalf of the respondent, ld. AR relying on Rule 27 of ITAT Rules, 1963 has challenged the order of ld. CIT(A) justifying the reopening of assessment proceedings u/s 147 of the Act. 9. We find that as per rule 27 of ITAT Rules, the respondent even without filing an appeal or a Cross Objection can support the order of CIT(A) on any of the grounds which have been decided against the respondent under this scope of raising a plea of maintain .....

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d by the Revenue will be defeated. Therefore, going through the rule 27 of the ITAT Rules, we are of the view that the alternate plea of the respondent i.e. assessee can be adjudicated with regard to the validity of reassessment proceedings. 10. We observe that following notice was issued vide Annexure-A attached to the notice u/s 148 of the Act to the assessee on 28.8.2009 showing the reason for reopening of assessment proceedings:- ANNEXURE-A A search u/s. 132 of the Act was carried out in. th .....

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9/-. 2. The assessee company is engaged in the business of dyeing and printing of fabrics on job work basis. It is seen from the office records that during the course of assessment proceedings, .the Assessing Officer had called for details in respect of month wise purchase" of colour chemicals. The same is seen to have been furnished by the assessee company vide its authorized representatives' written submission, dtd. 19.07.06. Details in this respect was furnished by the ld. Authorised .....

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colour chemicals to the extent of ₹ 47,59,796/- is not passed through the books of accounts of the assessee company. This implies that the said purchase of ₹ 47,59,796/- is unaccounted and that the cost of the same is met out of income not disclosed by the assessee in its return of income. 4. In view of the above facts, the undersigned has a reason to belief that at least an income to the extent of ₹ 47,59,796/- has escaped, assessment in the hands of the assessee company for .....

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or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or t .....

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or his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily a .....

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(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but- (i) income chargeable to tax has been under-assessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Ac .....

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der sub-section (2) of section 148. 12. Now applying the provisions of Sec.147 of the Act to the facts of the case, we observe that notice u/s 148 of the Act can be issued after the completion of four years from the end of assessment year only when any income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of assessee to make a return u/s 139 of the Act or in response to a notice u/s 142(1) or 148 of the Act or to disclose fully and truly all ma .....

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the course of assessment proceedings submitted on 19.7.2007 showed the purchases at ₹ 3,34,33,991/- and on the basis of these details ld. Assessing Officer was of the view that the difference of purchase i.e. ₹ 47,59,796/- (Rs.3,34,33,991/- ₹ 2,86,74,195/-) is of unaccounted purchases. 13. Going through the Annexures -A annexed with the notice u/s 148 of the Act, issued by ld. Assessing Officer, we observe that the information has been gathered from the record held with the dep .....

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asis of reopening the assessment. Therefore, appeal of the department can be dismissed on this ground. With the help of rule 27 of ITAT Rules, respondent can raise an argument qua an issue which has been decided against him in the impugned order. The respondent may not get further positive relief. For example the ld. CIT(A) has decided certain additions against the assessee and assessee did not file appeal against confirmation of those additions, meaning thereby that those issues have become fin .....

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