ITAT Quashes Reopening u/s 147, Declares Assessments Beyond Four Years as Invalid

ITAT Quashes Reopening u/s 147, Declares Assessments Beyond Four Years as Invalid

The Assessing Officer reopened assessments on the basis of information received in Investigation Wing regarding fictitious purchases attributable to accommodation entry providers. Additions were made by approximating profit on such purchases. The action was upheld by CIT(A) but limited the addition to 5%.
The assessee had contended that reopening after four years was precluded under the first proviso to Section 147, as the initial assessments had been finalized u/s 143(3). It was submitted that audited accounts and purchase ledgers were already revealed and no failure could be imputed. The Department stood its ground in the sense that confirmations and delivery proofs had not been provided.

Issue Raised: Whether reassessment proceedings beyond four years were valid under Section 147 when the assessee had already disclosed primary facts in the original assessment.

ITAT Held: The Tribunal ruled that the original assessment in the case had already been completed under section 143(3) of the Act. The information relied upon by the Assessing Officer was available around March 2014, when the assessment proceedings were still pending. However, no action was taken at that stage, and the reopening was initiated only in March 2018, well beyond the period of four years from the end of the relevant assessment year. The Tribunal held that the assessee had duly disclosed all material particulars in its audited accounts and return of income, and no failure on its part could be alleged so as to justify reopening under the first proviso to section 147 of the Act. Accordingly, the reassessment was declared invalid and quashed.

For A.Y. 2013-14 also, the Tribunal noted that the factual matrix and legal position remained the same as in A.Y. 2011-12. Since the reopening was initiated after four years without demonstrating any failure by the assessee to disclose fully and truly all material facts, the reassessment was held to be barred by law. Thus, the assessments framed under sections 143(3)/147 were quashed for both years, and both appeals of the assessee were allowed

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