2023 (2) TMI 499 - AT - Income Tax

Tribunal invalidates assessment order, admits appeal after condoning delay.

The appeal was admitted for hearing after the delay of 26 days was condoned due to a reasonable cause. The Tribunal found the reopening of the assessment ... Reopening of assessment u/s 147 - Reasons to belive - case can be reopened after expiry of four years from the end of the relevant Assessment Year - HELD THAT:- We have perused the reasons recorded u/s 148(2) of the Act and find that nowhere the Assessing Officer has stated that there is failure on the part of the assessee to disclose any material fact. It is apparent from the reasons that there is no satisfaction or mention of any failure on the part of the assessee. Therefore, on this count itself, the order passed by the Assessing Officer u/s 147/143(3) of the Act is liable to be quashed as the same is nullity in the eyes of law - Decided in favour of assessee. Issues Involved:1. Condonation of delay in filing the appeal.2. Legality of reopening the assessment under Section 147 of the Income Tax Act.3. Disposal of objections filed by the assessee before framing the assessment order.4. Issuance of notice under Section 143(2) of the Income Tax Act.Detailed Analysis:1. Condonation of Delay:The appeal was time-barred by 26 days. Both sides were heard, and it was found that there was a reasonable cause for the delay. Consequently, the delay was condoned, and the appeal was admitted for hearing.2. Legality of Reopening the Assessment:The assessee challenged the reopening of the assessment under Section 147 of the Income Tax Act. The original return was filed on 29/09/2008, and the assessment was framed under Section 143(3) on 31/12/2010. The case was reopened on 24/02/2015, and an addition of Rs. 25,00,000 was made under Section 68 for unexplained cash credit. The reopening was based on the belief that Rs. 1,80,00,000 had escaped assessment due to transactions with shell companies.The assessee argued that the reopening was invalid as the Assessing Officer (AO) did not point out any failure on the part of the assessee to disclose material facts, a requisite for reopening after four years as per the first proviso to Section 147. The Tribunal noted that the reasons recorded for reopening did not mention any failure by the assessee to disclose material facts. Citing various judicial precedents, the Tribunal concluded that the reopening was invalid and quashed the assessment order.3. Disposal of Objections:The assessee contended that the objections to the reopening were not disposed of before the assessment order was passed, which is against judicial precedents. The Tribunal agreed, citing that objections should be disposed of by a speaking order before framing the assessment order. The failure to do so rendered the assessment order invalid.4. Issuance of Notice under Section 143(2):The assessee argued that the AO did not issue a notice under Section 143(2) after the return was filed in response to the notice under Section 148, which is mandatory for assuming jurisdiction. The Tribunal found no evidence of such a notice being issued in the assessment records. The absence of this notice rendered the assessment order invalid.Conclusion:The Tribunal allowed the appeal on the legal issue, quashing the assessment order framed under Section 147 read with Section 143(3) of the Income Tax Act. Other pleas on quantum were left open for future adjudication if necessary. The order was pronounced on 28th November 2022 in Kolkata.