2020 (9) TMI 271 - AT - Income Tax

Tribunal quashes assessment reopening, citing incorrect facts. Assessing Officer's lack of due diligence leads to void additions.

The tribunal quashed the reopening of the assessment under section 147/148 of the Income Tax Act, 1961, due to incorrect facts and lack of proper ... Reopening of assessment u/s 147 - HELD THAT:- A.O. issued the notice under section 148 for the reasons that the assessee had not filed her return of income and that the assessee had purchased a property during the F.Y. 2009-10. However, the said reasons given by the A.O. for reopening the assessment are not correct since the assessee had filed the return of income on 30/03/2011. The assessee had also shown the investment in agricultural land amounting to ₹ 52,20,000/- in her Balance Sheet as on 31/03/2010, copy of which is placed of the assessee's compilation therefore both the reasons given by the A.O. i.e.; the assessee had not filed the return of income and invested in the property amounting to ₹ 1,49,02,500/- were wrong. A.O. reopened the assessment on the basis of wrong facts, so respectfully following the ratio laid down in the aforesaid referred to cases, reopening of the assessment in the present case was not valid, accordingly, the same is quashed. Since the appeal of the assessee is decided on the legal issue, therefore no findings are being given on the merit of the case relating to the quantum of addition. - Decided in favour of assessee. Issues Involved:1. Legality and validity of the notice issued under section 147/148 of the Income Tax Act.2. Justification for the additions made by the Income Tax Officer (ITO) on account of various gifts.Issue-wise Detailed Analysis:1. Legality and Validity of the Notice Issued under Section 147/148 of the Income Tax Act:The assessee challenged the jurisdiction of the Assessing Officer (A.O.) in issuing the notice under section 148 read with section 147 of the Income Tax Act, 1961, for reopening the assessment.The assessee e-filed her return of income on 30/03/2011, declaring an income of Rs. 2,06,465/-. The A.O. reopened the assessment under section 147 by issuing a notice under section 148 on 27/03/2017, based on information that the assessee had purchased property amounting to Rs. 1,49,02,500/- during the financial year 2009-10. The A.O. believed that the assessee's income corresponding to the purchase had escaped assessment.The assessee objected, stating that the notice was issued without proper application of mind as she had not purchased any property amounting to Rs. 1,49,02,500/- during the financial year 2009-10. Instead, she had purchased agricultural land for Rs. 49,32,000/-, which was duly declared in her return of income and balance sheet. The A.O. did not accept the objections, stating that the information was non-PAN based and that the assessee did not respond to initial queries.The CIT(A) upheld the A.O.'s decision, but the tribunal found that the reopening was based on incorrect facts. The A.O. incorrectly stated that the assessee had not filed her return of income and had invested in property amounting to Rs. 1,49,02,500/-, whereas the return was filed on 30/03/2011, and the investment in agricultural land was Rs. 52,20,000/-. The tribunal cited various case laws, including Sagar Enterprises Vs. ACIT and Baba Kartar Singh Dukki Educational Trust Vs. ITO, to support the decision that reopening based on incorrect facts is invalid. Consequently, the tribunal quashed the reopening of the assessment.2. Justification for the Additions Made by the ITO on Account of Various Gifts:The A.O. made additions totaling Rs. 46,00,000/- on account of gifts received by the assessee from four individuals: Rs. 15,00,000/- from her son, Rs. 15,00,000/- from her husband, Rs. 10,00,000/- from her husband's HUF, and Rs. 6,00,000/- from her father-in-law. The A.O. did not accept the assessee's explanation, stating that she failed to prove the capacity of the donors to give the gifts and the genuineness of the funds.The tribunal did not provide specific findings on the merit of the additions, as the appeal was decided on the legal issue of the validity of the reopening of the assessment. Since the reopening was quashed, the additions made by the A.O. were also rendered void.Conclusion:The tribunal quashed the reopening of the assessment under section 147/148 of the Income Tax Act, 1961, due to incorrect facts and lack of proper application of mind by the A.O. Consequently, the additions made on account of gifts were also rendered void. The appeal of the assessee was allowed.(Order pronounced in the open Court on 28/02/2020)