Reassessment u/s 147 void where No New Material came into Record: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) in the case of ACIT v. M/s. Goldmohur Design and Apparel Park Ltd. held that where the assessee duly furnished relevant material and no new material came to light, reassessment u/s 147 of the Act was unjustified.

The assessee in the present case is a joint venture vehicle formed between the Government of India through National Textile Corporation (NTC) and Pantaloon Retail India Ltd. (PRIL) as a part of textile mills in Mumbai in pursuance of the scheme for revival and rehabilitation of sick textile companies. PRIL was to introduce fresh capital in the assessee in terms of the minimum investment plan for modernization by acquiring share capital of the assessee at a premium. Three agreements were entered into, one of which was undertaking transfer agreement for the transfer of the entire undertaking on ‘as is where is’ basis to the assessee.

The present appeal was filed by the revenue being aggrieved from the setting aside of the reopening of the assessment holding that the information was already available with the Assessing Officer (AO) while completing the assessment u/s 143(3) of the Income Tax Act.

The prime contention of the revenue was that the reassessment was set aside irrespective of taking note of Explanation I to Section 147, according to which production of books of accounts or other evidences in itself by the assessee would not necessarily amount to disclosure where escapement arises out of the failure on the part of assessee to disclose fully and truly all material facts necessary for assessment.

The Tribunal bench comprising of Judicial Member Joginder Singh and Accountant Member G. Manjunatha answering the first issue-in-hand was of the opinion that the assessee duly furnished the details of shareholding, share capital, share premium, the copy of the agreement. Thus, no new material came to the light/ possession of the AO, hence, the reassessment u/s 147 of the Act was bad in law.

Answering the second issue pertaining to deletion of the addition made on account of alleged investment of shareholders as income from disclosed sources, the Hon’ble Tribunal relying upon the law laid down by the Apex Court held that “where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholder and assessing them to tax in accordance with law. It does not entitle the revenue to add the same to the assessee's income as the unexplained cash credit.”

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