2019 (11) TMI 813 - HC - Income Tax

High Court affirms ITAT decision quashing reassessment due to lack of evidence

Pr. Commissioner of Income Tax- 2 Versus M/s. Century Metal Recycling Pvt. Ltd.

The High Court upheld the ITAT's decision to quash the reassessment proceedings initiated by the AO due to lack of evidence of under-reporting in the sale ... Reopening of assessment u/s 147 - assessment on the basis of an information received from the Office of the ADIT (Inv) –II Faridabad, premised on Survey operation conducted on the assessee on 26.03.2015 - assessee during the Financial Year 2008-2009 was engaged in the sale of Aluminum Dross, which emerged during the manufacture of Aluminum alloy ingots in the guise of “Ash and Residue”, with the intention to suppress the actual value of aluminum dross and to evade payment of appropriate duty on the actual value thereof - CIT (A) noticed that the CESTAT had set aside the findings in the adjudication order–holding that the revenue had failed to bring out any corroborative evidences in the form of any cash transaction, or other evidences to support its findings confirmed by Tribunal - HELD THAT:- We answer the question framed in favour of the Revenue, and we direct that the appeal preferred by the revenue before the Tribunal is deemed as disposed of with liberty to both sides to seek revival in case need arises. We make it clear that, in case, the order, which forms the basis of issuance of the notice under Section 148, is upheld and sustained, eventually, then the Revenue shall be entitled to revive its proceedings pursuant to notice u/s 148 and the assessee shall not take up the plea of limitation. As of now, the re-assessment proceedings initiated by virtue of the notice under Section 148 do not survive due to the subsisting order of the CESTAT. We make it clear that we have not expressed any opinion with regard to any aspect on merits of the case. Issues:1. Validity of ITAT's decision in quashing reassessment proceedings made by the AO.Analysis:The High Court considered the appeal questioning the correctness of the ITAT's decision to quash the reassessment proceedings initiated by the AO. The original assessment order assessed a total loss against the declared loss. The reassessment was based on information from a survey operation indicating discrepancies in the sale of Aluminum Dross. The CIT (A) upheld the reopening but deleted the addition, citing lack of evidence of under-reporting. The Tribunal rejected the Revenue's appeal, relying on the CESTAT's order that lacked corroborative evidence. The Revenue argued that the Tribunal erred in not waiting for the outcome of the appeal filed against the CESTAT's order. The High Court referred to precedents and directed closure of the reassessment proceedings, allowing revival if the CESTAT's order is overturned. Both parties agreed to this course of action, and the appeal was disposed of without expressing any opinion on the case's merits.