2021 (8) TMI 81 - AT - Income Tax

Invalid Reopening of Assessment under Section 148 | Importance of Fresh Material | Legal Requirements

ACIT, Circle-22 (1), New Delhi Versus Sahyog Infrastructure Pvt. Ltd And Vice - Versa

The Tribunal found the reopening of the assessment under Section 148 invalid as it lacked fresh tangible material, relying on documents already considered ... Reopening of assessment u/s 147 - Unexplained income of the assessee u/s 68 - HELD THAT:- Documents were available with the ld. Assessing Officer at the time of making original assessment under Section 143(3) - Assessing Officer asked for the detailed explanation of the assessee on these documents during the course of original assessment. Assessee also submitted its explanation in the original assessment proceedings and based on these documents assessee also surrendered certain income during the course of original assessment. Assessing Officer accepted the explanation of the assessee, passed the original assessment order under Section 143(3). Assessing Officer applied his mind on the same set of documents which were examined by him during the course of original assessment proceedings. Therefore it is evident that there is absence of any tangible material coming into his possession of the LD AO after passing of the original assessment order. It is imperative to re-open the case of the assessee that there has to be fresh tangible material in the possession of the AO which was not available during the course of original assessment order. Otherwise the ld. Assessing Officer does not have power to re-open the case of the assessee on same material, when the original assessment was made under Section 143(3) of the Act on the same set of documents. DR also could not show us that what was the fresh tangible material coming into the possession of the Assessing Officer after completion of the assessment - CIT (Appeals) has incorrectly upheld the action of the ld. Assessing Officer in re-opening of the assessment.- Decided in favour of assessee. Issues Involved:1. Deletion of additions by CIT(A) on various counts (unexplained income, cash receipt, uncounted receipts, unsecured loan, cost of contract, establishment expenses).2. Legality of reopening the assessment under Section 148 of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Deletion of Additions by CIT(A):- Unexplained Income (Rs. 4,64,00,000/-): The Revenue challenged the deletion of Rs. 4,64,00,000/- added under Section 68 of the Income Tax Act, 1961, as unexplained income based on impounded documents.- Cash Receipt (Rs. 13,00,000/-): The Revenue contested the deletion of Rs. 13,00,000/- added as unexplained income in the form of a cash receipt, which the assessee had admitted as unexplained income.- Uncounted Receipts (Rs. 15,00,000/-): The Revenue objected to the deletion of Rs. 15,00,000/- added as uncounted receipts based on impounded documents.- Unsecured Loan (Rs. 16,00,000/-): The Revenue disputed the deletion of Rs. 16,00,000/- added as an unsecured loan, for which the creditworthiness and genuineness were not established.- Cost of Contract (Rs. 59,44,187/-): The Revenue challenged the deletion of Rs. 59,44,187/- added on account of the cost of the contract consumed.- Establishment Expenses (Rs. 3,37,068/-): The Revenue contested the deletion of Rs. 3,37,068/- added as establishment expenses.- Estimation of Turnover and Profit: The Revenue argued against the CIT(A)'s approach of deleting various additions based on impounded documents and estimating the turnover and profit at 5% without any basis.2. Legality of Reopening the Assessment under Section 148:- Assessee's Argument: The assessee argued that the reopening under Section 148 was based on non-application of mind and relied on documents already available during the original assessment. The assessee contended that the reopening lacked fresh tangible material, thus making it invalid.- Revenue's Argument: The Revenue argued that the reopening was valid as the assessee had not fully disclosed particulars of income during the original assessment. They emphasized that the reopening was based on information obtained during the survey, which revealed cash receipts not declared in the original return.Tribunal's Findings:- Reopening of Assessment: The Tribunal found that the reopening was based on the same documents considered during the original assessment under Section 143(3). The Tribunal noted that there was no fresh tangible material after the original assessment, making the reopening invalid. The Tribunal relied on the Supreme Court's decision in the case of Kelvinator of India, which emphasized the necessity of fresh tangible material for reopening assessments.- Assessment Order: Since the reopening was quashed, the Tribunal dismissed the Revenue's appeal as infructuous.Conclusion:The Tribunal allowed the assessee's cross-objection, quashing the reassessment proceedings and dismissing the Revenue's appeal. The Tribunal emphasized the requirement of fresh tangible material for valid reopening under Section 148 and found that the reopening in this case was not justified.