Income Tax

AO cannot made reassessment u/s 147 of the Income–tax Act, 1961 only on the ground that there is escapement of income

AO can­not made reassess­ment u/s 147 of the Income–tax Act, 1961 only on the ground that there is escape­ment of income; instead he should indi­cate the fact which was not dis­closed by assessee dur­ing the orig­i­nal assessment.

 

 Glob­al Sig­nal Cables (India) Pvt. Ltd. Vs. DCIT, W.P.© 747/2014, Date of Order: 17.10.2014, Del­hi High Court

Assessee filed his return of income for A.Y. 2066-07 and same was select­ed for scruti­ny assess­ment u/s 143(2) of the Act. AO passed assess­ment order u/s 143(3) of the Act on 29/08/2008. There­after, on 28/03/2013 AO issued notice u/s 148 of the Act for reopen­ing of assess­ment. Assessee asked for the rea­son record­ed u/s 148 of the Act and same was pro­vid­ed by AO. In the record­ed rea­sons the reopen­ing has been pro­posed on the ground that assessee has grant­ed inter­est free loan to par­ties on which no inter­est and finan­cial expens­es was dis­al­lowed. Assessee chal­lenge the same on ground that  reopen­ing is ini­ti­at­ed on the basis of the same mate­r­i­al and no fresh mate­r­i­al has come in the pos­ses­sion of the depart­ment as also there has been no fail­ure on the part of the assessee in dis­clos­ing ful­ly and tru­ly all mate­r­i­al facts.

Hon’ble High Court held that the escape­ment of income by itself is not suf­fi­cient for reopen­ing the assess­ment u/s 147 of the Act unless and until there is fail­ure on the part of the assessee to dis­close ful­ly and tru­ly all the mate­r­i­al facts nec­es­sary for assess­ment. In the present case, all rel­e­vant facts were dis­closed by assessee dur­ing orig­i­nal assess­ment and AO has not been specif­i­cal­ly indi­cat­ed any mate­r­i­al fact which was not dis­closed by the assessee.
Hence, appeal of assessee is allowed.

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