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Nalgonda Realtors Private Limited, ... vs Dy. Commissioner Of Income Tax , Central ... on 4 September, 2024 cites

Commissioner Of Income-Tax And Anr. vs Foramer France (Through Constituted ... on 16 January, 2003

23. In the present case, the original assessment has been completed u/s 143(3) of the Income Tax Act, 1961 and the assessment has been reopened u/s 147 of the Act beyond 4 years from the end of relevant assessment year. Once the assessment has been reopened after 4 years, then proviso to Section 147(1) of the Act comes into operation and as per said provision, the assessment cannot be reopened unless there is a finding from the Assessing Officer on failure of the assessee to disclose fully and truly all material facts necessary for his assessment. In the present case, going by reasons recorded by the Assessing Officer, we find that the Assessing Officer has recorded reasons on the basis of assessment proceedings of M/s. Indur Developers Pvt. Ltd for the A.Y. 2016-17 and made a sweeping statement that all the Kapil Group of companies are indulging in practice of collecting advances from customers and diverting interest bearing funds for non-business purposes being investments with group companies in the form of share capital and loans and advances. Further, the Assessing Officer considered the loans and advances received from the customers from the notes to accounts filed by the assessee along with regular return of income to support his reasons. From the above, it is undoubtedly clear that the Assessing Officer has failed to make out a case on the failure on the part of the assessee to disclose 14 fully and truly all material facts necessary for his assessment. Unless the Assessing Officer make any allegations that the assessee has failed to disclose relevant facts for assessment, the assessment cannot be reopened beyond 4 years when original assessment has been completed u/s 143(3) of the Act. This principle has been supported by the decision of Hon'ble Supreme Court in the case of CIT Vs. Foramer France (2003) 264 ITR 566 (SC). Therefore, in our considered opinion, reopening of the assessment under Section 147 of the Act on the basis of the reasons recorded by the Assessing Officer, which is available in the assessment order, is a clear case of non-application of mind by the Assessing Officer, before initiating the proceedings under Section 147 of the Act. Therefore, we are of the considered view that the reopening of the assessment and consequent assessment order passed by the AO under Section 143(3) r.w.s. 147 of the Act dated 28-12-2019 is invalid and liable to be quashed. Thus, we quash the assessment order passed by the AO.
Supreme Court of India Cites 0 - Cited by 219 - Full Document

Commnr. Of Income Tax, Delhi vs M/S. Kelvinator Of India Ltd on 18 January, 2010

22. We have given our thoughtful consideration to the reasons recorded by the AO to reopen the assessment under Section 147 of the Act, and we ourselves do not subscribe to the reasons given by the AO for the simple reason that, there is no live nexus between the reasonable belief of escapement of income on the basis of fresh 12 material which came to the possession of the Assessing Officer during the course of search and the escapement of income. If we go by the reasons recorded for reopening of the assessment, the AO reopened the assessment on the basis of material belonging to some other assessees and made a sweeping statement that all Kapil group companies are indulged in similar practice of collecting advances from customers for the sale of flats and diverting funds to other group companies for non-business purpose. Therefore, interest paid on customer advance is not wholly and exclusively for the purpose of the business of the assessee. In our considered opinion, the AO is entitled to reopen the assessment, if he has reason to believe that income chargeable to tax has escaped assessment for that assessment year. Further, two conditions must be satisfied for invocation of power under Section 147 of the Act. They are : (1) existence of reason to believe; (2) the escapement of any income chargeable to tax for assessment. The reason to believe by the AO should be based on fresh material which suggests escapement of income, and further, there should be a live nexus between the formation of belief and the material in the possession of the AO. In the present case, if we go by the reasons recorded by the AO, we find that the Assessing Officer formed his opinion of escapement of income of the assessee for AY 2013-14 on the basis of material found in the case of M/s. Indur Developers for the assessment year 2016-17, though there is no material with the AO pertaining to the assessee for AY 2013-14. This legal principle is supported by the decision of Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd reported in (2010) 320 ITR 561 (SC) wherein it has been clearly held that the Assessing Officer has power to reopen, provided there is 'tangible material' to come to conclusion that there is 13 escapement of income from assessment and further reasons must have a live link for formation of belief.
Supreme Court of India Cites 4 - Cited by 1696 - S H Kapadia - Full Document
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