2018 (5) TMI 154 - HC - Income Tax

Court upholds Income Tax Officer's decision to re-open assessments for 2010-2011 and 2011-2012

The Court upheld the Income Tax Officer's decision to re-open assessments for the years 2010-2011 and 2011-2012. The appellant's challenge, based on the ... Reopening of assessment - addition of unexplained credit under Section 68 - eligibility of reason to believe - Held that:- The Income Tax Officer would be in a position to consider the introduction of capital for the relevant year only in case returns were filed by the appellant. The appellant having failed to file its return of income for the Assessment Years 2010-11 and 2011-12 cannot be heard to say that the Income Tax Officer was not correct in re-opening the assessment when it was made known at a later point of time that capital was introduced in the course of the earlier two financial years. The reasons given by the Income Tax Officer would satisfy the statutory requirements for re-opening the assessment. We are therefore of the view that the appellant has not made a case to interfere in the proceedings initiated by the Income Tax Officer for re-opening the assessment for the Assessment Years 2010-11 and 2011-12 - Decided against assessee. Issues:Challenging order of Income Tax Officer on re-opening assessment for Assessment Years 2010-2011 and 2011-2012 under Section 147 of Income Tax Act based on CIT (A) direction.Analysis:The appellant, a partnership firm, challenged the order of the Income Tax Officer regarding the re-opening of assessments for the years 2010-2011 and 2011-2012 under Section 147 of the Income Tax Act. The appellant contended before the Writ Court that the notices issued under Section 148 should have been based on a specific direction from the Commissioner of Income Tax (Appeals) (CIT (A)), which was not the case. The learned single Judge dismissed the writ petitions, allowing the Assessing Officer to complete the assessment lawfully. The appellant then appealed against this decision.The appellant's business activities include commercial and trading, with the assessment for the year 2012-2013 resulting in an addition of unexplained credit under Section 68 of the Income Tax Act. The CIT (A) allowed the appeal, stating that the capital was introduced in earlier financial years, and the Assessing Officer should initiate suitable proceedings for the years 2010-2011 and 2011-2012. The Income Tax Officer subsequently issued notices for re-opening the assessments for those years.The appellant argued that no specific direction was given by the CIT (A) for re-opening the assessments, which was a crucial point in the appeal. The Income Tax Officer justified the re-opening based on lack of filed returns for the relevant years and insufficient proof regarding the source of investments. The appellant's resistance to the proceedings was based on the contention that proper reasons were not provided, despite the Income Tax Officer's justifications.The Court found that the reasons given by the Income Tax Officer were sufficient for re-opening the assessments, considering the appellant's failure to file returns for the years in question. The appellant's inability to establish a link between the capital introduced and its withdrawals for investments further supported the decision to re-open the assessments. The Court upheld the order passed by the learned single Judge, dismissing the intra court appeals and confirming the re-opening of assessments for the years 2010-2011 and 2011-2012.In conclusion, the Court found that the appellant failed to meet the statutory requirements to challenge the re-opening of assessments by the Income Tax Officer. The reasons provided by the Income Tax Officer were deemed satisfactory, and the appellant's appeal was dismissed, with no costs imposed.