2026 (4) TMI 47

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....liable to be quashed and consequently the learned Commissioner of Income Tax (Appeals) ought to have held that the entire reassessment proceedings are void ab initio. 3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 25,00,000 made by the assessing officer towards alleged unexplained income in the nature of accommodation entry from M/s Patel Engineering Limited. 4. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that the impugned amount is not in the nature of income and did not even belong to the impugned assessment year. 5. Any other ground that may be urged at the time of appeal hearing." 2. Succinctly stated, the assessee-company, which is engaged in the business of civil contract works, had filed its return of income for A.Y. 2013-14 on 30.09.2013, declaring an income of Rs. 4,18,57,150/-. 3. The original assessment was framed by the AO vide his order passed under Section 143(3) of the Act, dated 11.03.2016, determining the total income of the assessee company at Rs. 4,29,49,174/-. 4. Subsequently, the AO, based on information rece....

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....is order. 8. The assessee company aggrieved with the CIT(A) order has carried the matter in appeal before us. 9. Shri GVN Hari, the Ld. Authorised Representative (AR) of the assessee company, submitted that the reopening of assessment is bad in law as the same had been made beyond four years from the end of the relevant assessment year without there being any failure on the part of the assessee company to disclose fully and truly all material facts necessary for assessment. The Ld. AR submitted that the original assessment was framed by the AO, vide his order passed under Section 143(3) of the Act, dated 11/03/2016, wherein all primary facts were duly disclosed (copy of assessment order placed on record). The Ld. AR took us through the copy of the "reasons to believe" based on which the concluded assessment of the assessee company was reopened and submitted that there was no whisper in the same that the case was being reopened for any failure of the assessee company to fully and truly disclose all material facts necessary for framing of its assessment. The Ld. AR to support his contention that, now when the AO had not stated in the "reasons to believe" that the concluded asse....

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....em it apposite to cull out the "reasons to believe" based on which the concluded assessment was reopened by the AO, as communicated to the assessee company, which reads as under (relevant extract): "Sir/ Madam/M/s. Subject: Reasons for re-opening in your own case for A.Y 2013-14:-Reg With regard to the issue of notice u/s 148 dated 31.03.2019 for the A.Y. 2013-14 in your case, as requested by you, the reasons recorded for re-opening the assessment are provided as under: "As per the information provided by the Investigation Wing, Mumbai, it is noticed that the assessee company has received an amount to the tune of Rs 25,00,000/-from M/s Patel Engineering Ltd, operated by one Sri Anil Kumar Kabra, which was found to be an accommodation entry provider without having any business. Hence, the amount of Rs 25 lakhs received during the F.Y 2012-13 relevant to A.Y 2013-14 from the shell company needs to be added to the total income and is to be brought to tax." In view of the above, the case is reopened u/s 147 of the IT Act, 1961. VENUDHARGODESI CIRCLE-17(2), HYDERABAD" 13. Admittedly, the original assessment was framed by the AO vi....

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....ere was no mention in the "reasons to believe" that the concluded assessment of the assessee was being reopened beyond a period of four years from the end of the relevant assessment year, i.e., AY 2010- 11, as there was a failure on his part to fully and truly disclose all material facts necessary for framing the assessment, quashed the notice issued u/s 148 of the Act, dated 31/03/2017, as well as the consequential assessment framed on the basis of the same. For the sake of clarity, we deem it apposite to cull out the observations of the Hon'ble High Court, as under: "In the cases on hand, as already stated supra, neither in the notices dated 31.03.2017 nor in the reasons furnished in September/ October, 2017, did the AO record the presence of the aforestated jurisdictional conditions for reopening the subject assessments. Even thereafter, when she rejected the petitioners' objections under her letters dated 17.11.2017, the AO did not do so. Thus, as matters stand, the AO never opined that issue of the subject notices was warranted on the ground that the petitioners did not disclose fully and truly all material facts necessary for their assessment or that the income that ....

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....tioners' objections thereto vide letters dated 17.11.2017 are declared illegal. The original Assessment Orders of the petitioners in relation to the assessment year 2010- 2011, which have been upheld in appeal by the Appellate Tribunal and, thereafter, by this Court, shall be binding upon the Revenue." (emphasis supplied by us) Also, we find that a similar view had been taken by the Hon'ble High Court of Bombay in Sound Casting (P) Ltd. Vs. Dy. CIT (2012) 250 CTR 119 (Bombay). It was observed that, as there was no allegation in the reasons disclosed to the assessee company that there was any failure on its part to fully and truly disclose material facts necessary for assessment, the jurisdictional condition for reopening the assessment beyond a period of four years was not fulfilled. For the sake of clarity, we deem it apposite to cull out the observations of the Hon'ble High Court, as under: "2. The reopening of the assessment has admittedly taken place beyond a period of four years from the end of the relevant Assessment Year. There is no allegation in the reasons which have been disclosed to the assessee that there was any failure on his part to fully and truly di....