TMI Blog2022 (2) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... e original assessment was completed u/s 143(3) of the IT Act, the issue of purchases was examined by the AO during the course of assessment proceedings, therefore, in absence of any allegation by the AO in the reasons that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, the reassessment proceedings, in our opinion, are not in accordance with the law. We, therefore, quash the reassessment proceedings. The grounds of appeal No.2 to 4 raised by the assessee are accordingly allowed. - ITA No.2919/Del/2016 - - - Dated:- 10-2-2022 - Shri R.K. Panda, Accountant Member And Ms Suchitra Kamble, Judicial Member For the Assessee : Shri Vishal Kalra, Advocate For the Revenue : Shri Kumar Padmapani Bora, Sr. DR ORDER PER R.K. PANDA, AM: This appeal filed by the assessee is directed against the order dated 29th March, 2016 of the CIT(A)-32, New Delhi, relating to AY 2006-07. 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of manufacturing and sale of utensils. It filed its return of income on 17th August, 2007 declaring an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The same is added back to the total income of the assessee. 4. Before the CIT(A), the assessee, apart from challenging the addition on merit, challenged the validity of the reassessment proceedings. However, the ld.CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the validity of the reassessment proceedings as well as the addition on merit. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- 1. That the CIT(A) erred on facts and circumstances of the case and in law in upholding the assessment completed under section 147 / 143(3) of Income-tax Act, 1961 ( the Act ) at an income ₹ 79,00,450/- as against income of ₹ 52,22,785/- assessed under section 143(3) of the Act. 2. That the CIT(A) erred on facts and circumstances of the case and in law in upholding the assumption of jurisdiction under section 147 of the Act and further erred in upholding the reassessment order which is beyond jurisdiction, bad in law and void-ab-initio. 3. That the CIT(A) erred on facts and circumstances of the case and in law in upholding the illegal action of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Balaji Trading Company. Thus, the total purchases from the above two parties come to ₹ 26,77,663/- whereas the AO has recorded reasons regarding the accommodation entry of ₹ 32,16,435/- and this indicates that there is no application of mind by the AO. Referring to various decisions, he submitted that when the original assessment has been completed u/s 143(3) and there is no allegation by the AO of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, the AO cannot reopen the assessment beyond a period of four years from the end of the relevant assessment year. Even on merit, he submitted that the assessee is a star trading house and the sales are accepted and there is no sales outside the books of account. All payments were made by account payee cheques. The AO during the course of original assessment proceedings has scrutinized all the details including all purchases exceeding ₹ 1 lakh, therefore, the addition made by the AO and sustained by the CIT(A) is not justified. He accordingly submitted that the order of the CIT(A) be set aside and the grounds raised by the assessee be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll material facts necessary for completion of the assessment, such issue of notice beyond a period of four years from the end of the relevant assessment year is not in accordance with the provisions of section 147 of the Act. 11. We find some force in the above arguments of the ld. Counsel for the assessee. It is an admitted fact that the original assessment was completed u/s 143(3) of the Act on 23.07.2008 and the assessment year involved is AY 2006-07. The AO, during the course of assessment proceedings, had raised various queries and the assessee, vide letter dated 3rd July, 2008 has given the details of monthwise purchase and sales and the details of purchases of more than one lakh as per query No.4 and 5 raised by the AO in the original assessment proceedings. Further, in the reasons recorded, there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Under these circumstances, the notice issued by the AO beyond a period of four years from the end of the relevant assessment year in a case where the original assessment was completed u/s 143(3) will not be in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Assessing Officer at the time of original assessment would justify initiation of reassessment proceedings. The requirement in such cases is that the information or material available should relate to material facts. The expression material facts means those facts which if taken into account would have an adverse effect on the assessee by a higher assessment of income than the one actually made. They should be proximate and not have a remote bearing on the assessment. The omission to disclose may be deliberate or inadvertent. The question of concealment is not relevant and is not a precondition which confers jurisdiction to reopen the assessment. Correct material facts can be ascertained from the assessment records also and it is not necessary that the same come from a third person or source, i.e., from source other than the assessment records. However, in such cases, the onus will be on the Revenue to show that the assessee had stated incorrect and wrong material facts resulting in the Assessing Officer proceeding on the basis of facts, which are incorrect and wrong. The reasons recorded and the documents on record are of paramount importance and will have to be examined t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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