2020 (1) TMI 772 - AT - Income Tax

Tribunal dismisses Revenue's appeals for AY 2005-06 and 2006-07, upholds CIT(A)'s decisions.

Deputy Commissioner of Income-tax, Central Circle-4 (4), Kolkata. Versus Jayashree Jayakar Mohanka, L/H of Late Lalit Mohanka

Deputy Commissioner of Income-tax, Central Circle-4 (4), Kolkata. Versus Jayashree Jayakar Mohanka, L/H of Late Lalit Mohanka - TMI Issues involved:1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for AY 2005-06.2. Applicability of the amendment to Section 149(1)(c) of the Income Tax Act, 1961.3. Deletion of addition of Rs. 46,84,050/- by the CIT(A) in AY 2006-07.4. Alleged violation of Rule 46A of the Income Tax Rules, 1962 by the CIT(A).Issue-wise detailed analysis:1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for AY 2005-06:The primary issue was whether the reassessment proceedings initiated under Section 148 on 19.08.2013 for AY 2005-06 were time-barred. The CIT(A) held that the proceedings initiated by the AO were barred by limitation as the period for reopening the assessment had expired on 31.03.2012. The CIT(A) observed that the amendment to Section 149(1)(c) by the Finance Act, 2012, which extended the time limit for reopening assessments to sixteen years, was effective prospectively from 01.07.2012 and did not revive proceedings that had already become time-barred. The CIT(A) relied on the Supreme Court judgment in S. S. Gadgil Vs. Lal & Co (53 ITR 231), which held that an amendment cannot revive a right to reopen an assessment that was already barred by limitation.2. Applicability of the amendment to Section 149(1)(c) of the Income Tax Act, 1961:The CIT(A) held that the amendment to Section 149(1)(c) was not retrospective and could not be applied to assessments that had already become time-barred before the amendment came into force on 01.07.2012. The CIT(A) noted that the Finance Act, 2012 specifically made the amendment effective prospectively and did not indicate any legislative intent to apply it retrospectively. The CIT(A) also referred to various judgments, including the Supreme Court's decision in Union of India Vs Uttam Steels Ltd (319 ELT 598), which held that an amendment extending the period of limitation cannot revive proceedings that were already time-barred.3. Deletion of addition of Rs. 46,84,050/- by the CIT(A) in AY 2006-07:The CIT(A) deleted the addition of Rs. 46,84,050/- made by the AO under Section 68 of the Act. The CIT(A) found that the amount credited in the bank account on 31.03.2006 represented the redemption proceeds of an investment made on 07.12.2004 and did not constitute fresh income for AY 2006-07. The CIT(A) relied on the confirmation from HSBC, Geneva, and other supporting documents provided by the assessee, which established that the credit was related to the redemption of an earlier investment. The CIT(A) held that the addition was unjustified as the investment was made in FY 2004-05 and was already considered in the assessment for AY 2005-06.4. Alleged violation of Rule 46A of the Income Tax Rules, 1962 by the CIT(A):The Revenue contended that the CIT(A) admitted additional evidence in violation of Rule 46A. However, the CIT(A) had called for a remand report from the AO before adjudicating the appeal. The AO, in the remand report, admitted the connection between the entries in the bank statement but justified the addition on other grounds. The CIT(A) considered the remand report and the confirmation from HSBC, Geneva, and concluded that the credit was related to the earlier investment. The Tribunal found no specific evidence presented by the Revenue to prove that the CIT(A) admitted fresh evidence in violation of Rule 46A and upheld the CIT(A)'s order.Conclusion:The Tribunal dismissed the Revenue's appeals for both AY 2005-06 and AY 2006-07. For AY 2005-06, the Tribunal upheld the CIT(A)'s decision that the reassessment proceedings were time-barred and the notice under Section 148 was invalid. For AY 2006-07, the Tribunal upheld the deletion of the addition of Rs. 46,84,050/- by the CIT(A), finding that the credit in the bank account was related to the redemption of an earlier investment and not fresh income for the relevant year. The Tribunal also found no violation of Rule 46A by the CIT(A).