The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has invalidated assessment reopened after four years as there was no failure to disclose the material facts fully.
The assessment order involved in this case of assessee, Samridhi Stocks Pvt. Ltd was A.Y 2010-11 and the reasons for the reopening of the assessment were recorded on 24.03.2017. The original assessment in this case was carried out under Section 143(3) of the Income Tax Act, 1961.
Sunil Surana, who appeared on behalf of the appellant submitted that Proviso to Section 147 of the Income Tax Act was attracted in this case which provided that where original assessment had been carried out under Section 143(3) of the Income Tax Act, no action should be taken under Section 147 of the Income Tax Act after the expiry of four years from the end of the relevant assessment year unless the income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment year.
He submitted that the assessee had fully disclosed all the material facts relating to the transactions carried out by the assessee.
He further submitted that it had been mentioned in the reasons recorded that the assessee had booked bogus profit, whereas, in the assessment order, the Assessing Officer had disallowed the loss relating to the commodity transaction. The assessee did not book any profits as alleged in the reasons recorded, therefore, the reopening of the case was based on wrong facts.
Vijay Kumar appeared on behalf of the revenue.
The two-member Bench of Sanjay Garg, (Judicial Member) and Manish Borad, (Accountant Member) observed that the Assessing Officer has reopened the assessment merely based on the information received from the investigation wing without verifying the veracity and truthfulness of such information. The information was wrong and the Assessing Officer reopened the assessment on the basis of borrowed satisfaction without correlating the same with the facts of the case.
The Bench allowed the appeal holding the assessment was bad in law and observed that, “Even there is no allegation that the income of the assessee has escaped assessment due to non-disclosure of the facts necessary for the assessment and since the assessment has been reopened after four years of the end of relevant assessment year, hence, the exception provided under 1st Proviso to section 147 is attracted.”
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