×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
The captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-53, Mumbai [in short‘CIT(A)’] and arise out of the assessment completed u/s 143 r.w.s 147 of the Income Tax Act 1961 (the ‘Act’). As common issues are involved, we are proceeding to dispose them off through a consolidated order for the sake of convenience. Facts being identical, we begin with the assessment year (AY) 2008-09.
ITA No. 2750/MUM/2019
Assessment Year: 2008-09
2. The 1st ground of appeal:
In the facts and the circumstances of the case and in law, the AO erred in passing the order u/s 143(3) r.w.s. 147 by mere change of opinion which is bad in law as per the judgement of SC in the case of Kelvinator of India Ltd (320 ITR 561 SC), that too after four years and therefore rendering the whole re-assessment bad in law, also on the basis of borrowed satisfaction, presumption and surmises.
3. Briefly stated the facts are that the assessee filed its return of income for the A.Y. 2008-09 on 27.09.2008 declaring total income of Rs.10,15,730/. The assessee trades in sarees and saree fabrics. The return was processed u/s.143(1) of the Act. Thereafter, the assessment was completed u/s. 143(3) by the Assessing Officer (AO) on 03.09.2010 determining the total income at Rs.10,65,910/-. Thereafter, the return was revised to Rs.10,15,730/- after giving effect to the order of the CIT(A).
Subsequently, the AO received information from the Investigation Wing of the Department that the assessee had taken accommodation entry amounting to Rs.10,00,000/- from M/s. Kunal Gems, a concern controlled by Mr. Praveen Kumar Jain. On the basis of the above information, the AO reopened the assessment by issuing notice u/s.148 dated 30.03.2015 to the assessee. In response to the said notice, the assessee vide letter dated 02.04.2015 requested the AO to treat the original return filed on 27.09.2008 as the return filed in response to notice u/s. 148.
4. In appeal, the ld. CIT(A) held that the assessee was a beneficiary in as much as the unsecured loan has been claimed to have been taken from Kunal Gems, which was a Praveen Kumar Jain group entity and it had not disclosed that it had taken accommodation entries of unsecured loans from Praveen Kumar Jain group. Further, it was observed by him that there was definite failure on the part of the assessee to disclose true and full material particulars in respect of its income. With the above observations, the ld. CIT(A) affirmed the reopening u/s.148 done by the AO.
5. Before us, the ld. counsel for the assessee submits that the assessment completed u/s.143(3) cannot be reopened u/s. 147 after expiry of 4 years from the end of the relevant assessment year, unless the income chargeable to tax has escaped assessment for failure on the part of the tax payer to disclose fully and truly all material facts necessary for the assessment. In this regard, reliance is placed by him on the decision in Kelvinator of India Ltd. (supra).
6. On the other hand, the ld. Departmental Representative (DR) submits that it is not a case of change of opinion as the assessee failed to disclose the fact in the return of income that it had taken accommodation entries of unsecured loans from Praveen Kumar Jain group and the information came to the knowledge of the AO only after the original assessment order was passed in this case. Reliance was placed on the decision in ITO v. Purushottam Das Bangur (1997) 224 ITR 362 (SC) and M/s. Phool Chand Bajrang Lal and Anr. v. Income Tax Officer and Anr., (1993) 203 ITR 456 (SC). Thus, the ld. DR supports the order passed by the ld. CIT(A) on the above ground of appeal.
7. We have heard the rival submissions and perused the relevant material available on record. In the instant case, we find that the AO reopened the assessment on the basis of the findings in the search action u/s. 132 of the Act in the case of Praveen Kumar Jain group, wherein evidence was gathered that a large number of entitites managed and controlled by the Jain Group were engaged in providing accommodation entries and the assessee was a beneficiary in as much as unsecured loans have been claimed to have been taken from Kunal Gems, which was a Praveen Kumar Jain group. Further, the assessee had not disclosed the fact that it had taken accommodation entries of unsecured loans on the above group. Thus, there was a definite failure on the part of the assessee to disclose truly and fully the above information before the AO in original assessment completed u/s 143(3) on 03.09.2010.
In CIT v. Kelvina or of India Ltd (2010) 320 ITR 561 (SC), it is held that the AO has power to reopen the assessment if there is tangible material to conclude, prima facie that there has been escapement of income. However, the Court cautioned that the power of assessment is not one of review and that it does not admit of information of a second opinion. The scope of the phrase "reason to believe" was examined by the Supreme Court previously in M/s. Phool Chand Bajrang Lal and Anr. v. Income Tax Officer and Anr., (1993) 203 ITR 456 (SC). In Phool Chand, the court made observations which remain undisturbed in Kelvinator:
"Thus, where the transaction itself on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the