TaxTMI 
TaxTMI 
2024 (7) TMI 634
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....r, assessee's case was reopened u/s. 147 after recording the following reasons:- "The assessee firm filed Its ROI for the relevant AY on 30.09.2011. Further, the regular scrutiny assessment u/s 143(3) of the Act was completed on 21.03.2014 after accepting the return income at Rs. 1,99,90,580/-. 2. It is seen from the record that as per schedule 10 of Balance Sheet, the sundry creditors Included an amount of Rs. 1,93,90,770/- pending since November, 2006 which was payable to M/s Videocon Athithi Shelter Pvt Ltd towards purchase of transferable development rights. Since considerable time of more than 06 years had elapsed, the amount of Rs. 1,93,90,770/- should be treated now as cessation of liability u/s 41 (1) of the Act and added back to the total income of the assessee firm. Secondly, the assessee had sold 34 units to Shri Narendra D Patel (HUF), proprietor of M/s ABC Corporation and had recorded sales during the year at Rs. 16,95,00,000/- against the stamp duty valuation at Rs. 21,17,90,000/-. As per record, the booking was made in the FY 2004-05 and the amount of Rs. 16,95,00,000/- was received as a advance However, perusal of the balance sheet of FY 2008-09 did not reveal....
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....Ltd., towards purchase of transferable development rights. Since more than 6 years had lapsed, therefore, ld. AO held that it amounts to deemed cessation of liability u/s 41 (1) of the Act, accordingly, he made addition of Rs. 1,93,90,770/-. 4. Secondly, on perusal of profit and loss account he noted that assessee debited an amount of Rs. 3,54,46,840/- on account of loss on cancellation of sales. After verifying the details, he noted that total consideration was made at Rs. 17,72,70,000/- for an area of 10364 sq.mtr, however, the total income as shown in the profit and loss account from the project of sale of shops was shown at Rs. 4,91,02,350/-, thus, according to the ld. AO sale of Rs. 17,72,70,000/- has not been reflected in the books of accounts during the year 2008-09. This has resulted incorrect deduction of Rs. 3,54,46,840/- and accordingly, he added back the claim of loss and cancellation of sales of Rs. 3,54,46,840/-. 5. The ld. CIT(A) before whom the validity of reopening was challenged has dismissed the said ground. However, on merits he has allowed addition of Rs. 1,93,90,770/- made on account of cessation of liability and in so far as disallowance of Rs. 3,54,46,840/....
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.... course of hearing which are placed in the paper book from pages 23-35. He pointed out that assessee had duly filed the details of sundry creditors, details of cancellation of sales, etc., which had been duly furnished and examined by the ld. AO. If all the details and issues on which reasons have been recorded were furnished, then assessee had made full and true disclosure before the ld. AO and therefore, there was no failure on the part of the assessee. If the case has been reopened beyond the period of four years from the end of the relevasnt assessment year, one of the key requirements is that, there has to be failure on the part of the assessee to disclose full and true material facts. From the bare perusal of the reasons recorded it is seen that there is no tangible material and in fact, AO is re-examining the same records, i.e., balance sheet and profit and loss account to record his reasons to belive without ascribing any failure on the part of the assessee. Simply mentioning that there is failure to disclose fully all material facts does not tantamount to actual failure on the part of the assessee, but ld. AO has to establish the fact in the "reasons recorded" itself and t....
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....erused the relevant finding given in the impugned order on the issue of validity of reopening u/s. 147. Undisputedly, here in this case regular scrutiny assessment was completed u/s. 143(3) vide order dated 21/03/2014. After the completion of assessment, notice u/s. 148 has been issued on 27/03/2018 almost at the fag end of sixth year from the end of the relevant assessment year. In terms of then first proviso to Section 147, where assessment has been completed u/s. 143(3), then there is an embargo of limitation for reopening of four years. Such an limtation can be overcome and ld. AO has to acquire jurisdiction for reopening the case beyond the period of four years from the end of relevant assessment year, then one of the prime condition is that there has to be failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Unless that failure is not established, the reopening cannot be done. 9. Apart from that, there has to be some tangible material and information coming on record having live link nexus with the income escaping assessment, especially more so in the cases where assessment has been completed u/s. 143(3) and the details....
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....ince more than 6 years have been lapsed therefore, it is a deemed cessation of liability which is incorrect in law and on facts, because till assessee recognizes such debt it cannot be treated as cessation of liability. Secondly, in so far as recording of the sales, assessee has given the details before the ld. AO, as how the sales have been recorded in the books and also has given specific explanation during the course of original assessment proceedings vide letter dated 13/01/2014 which for the sake of ready reference is reproduced hereunder:- Explanation regarding less sale consideration than stamp duty valuation: "The assessee has booked sale at Rs. 16,95,00,000/-, however stamp duty valuation is Rs. 21,17,90,000/-. The difference is of Rs. 4,22,90,000/- The assessee booked sale made to ABC Corporation for the first time in financial year 2004-05 which can be seen from the page no. 34 of the agreement (already submitted vide submission dated 7 January, 2014). However, the sale rate per sq. mt. was not fixed and hence the agreement was not registered with the ROC Authorities. The agreement got register with ROC Authorities during the year under consideration and they value....