Saktijit Dey ORDER
Saktijit Dey, Member (J)
1. This is an appeal by the assessee against order dated 04.01.2019 of learned Commissioner of Income-Tax (Appeals)-16, New Delhi pertaining to assessment year 2009-10.
2. Grounds raised by the assessee are as under:
1. On the facts and circumstances of the case and in law, the notice under section 148 of the Income-Tax Act, 1961 issued in the case is bad-in-law, without jurisdiction, barred by limitation and illegal and, therefore, the said notice along with the assessment order passed by the Assessing Officer on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
2. On the facts and circumstances of the case and in law, the reassessment proceeding initiated by the Assessing Officer is contrary to specific provisions of section 147 to 151 of the Income-Tax Act, 1961 and, therefore, the said reassessment proceeding initiated along with the assessment order passed by the Assessing Officer on the foundation of such proceeding are liable to be quashed and CIT(A) erred in not holding so.
3. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs. 35,63,423/- made by the Assessing Officer under section 68 of the Income-Tax Act, 1961 in respect of sundry creditors.
4. On the facts and circumstances of the case and in law, the addition of Rs. 35,63,423/- made by the Assessing Officer is beyond the scope of jurisdiction and provisions of section 147/148 of the Income-Tax Act, 1961 and CIT(A) erred in not holding so.
3. Briefly, the facts are, assessee is a resident partnership firm engaged in manufacturing and export of garments. For the assessment year under dispute, assessee filed its return of income on 30.09.2009 declaring income of Rs. 11,82,236. The return of income filed by the assessee was subjected to scrutiny and assessment was completed under Section 143(3) of the Income-Tax Act, 1961 vide order dated 29.12.2011 determining the total income at Rs. 3,68,99,746.
4. Against the assessment order so passed, assessee preferred an appeal before learned Commissioner (Appeals) and thereafter before the Tribunal.
5. As observed by the assessing officer, while deciding the appeal the Tribunal deleted the addition made by the assessing officer. Therefore, the department went in appeal to Hon'ble High Court. Be that a it may, subsequently, the assessing officer on examining the assessment record, found that one of the sundry creditors, namely, M/s. Goldplus Fabrics with aggregate credit amount of Rs. 35,63,423 had not filed any confirmation of accounts. However, no addition of such amount was made while completing the original assessment. Based on such reasoning, the assessing officer reopened the assessment under Section 147 of the Act. Though, the assessee objected to the reopening of assessment, however, rejecting the objection of the assessee, the assessing officer proceeded to complete the assessment under Section 147/143(3) of the Act by adding back the amount of Rs. 35,63,423. The addition made was also sustained by learned Commissioner (Appeals).
6. Before me, learned counsel appearing for the assessee submitted that the reopening of assessment was after four years from the end of the relevant assessment year. He submitted, since, the original assessment was made under Section 143(3) of the Act, the assessing officer could not have reopened the assessment without demonstrating that the escapement of income was due to the failure on the part of the assessee to furnish particulars of its income truly and correctly.
7. Drawing our attention to the reasons recorded, learned counsel for the assessee submitted, after completion of the original assessment, no new tangible material has come to the possession of the assessing officer. He submitted, by revisiting material already available on record, the assessing officer has reopened the assessment under Section 147 of the Act. Thus, he submitted, the reopening of assessment is invalid.
8. As regards, the merits of the issue, learned counsel for the assessee submitted, identical addition made in respect of other sundry creditors were deleted by the Tribunal while deciding assessee's appeal arising out of original assessment proceedings. He submitted, the assessing officer without properly verifying the facts has simply added the closing balance of the creditors. He submitted, the parties are trade creditors having regular transaction with the assessee. He submitted, purchases are not doubted by the assessing officer. He submitted, even, the repayment of the amount standing in the name of the concerned creditors was made in the next financial year. Thus, he submitted, the addition made is unsustainable on merits.
9. Learned Departmental Representative strongly relied upon the observations of the assessing officer and learned Commissioner (Appeals).
10. I have considered rival submissions and perused the material available on record.
11. Undisputedly, in assessee's case, original assessment was completed under Section 143(3) of the Act on 29.12.2011. Whereas, the assessing officer has issued notice under Section 148 of the Act on 08.03.2016, meaning thereby, the reopening of assessment was made after expiry of four years from the end of the relevant assessment year. In fact, the assessing officer has reopened assessment in March, 2016 just prior to expiry of six years from the end of the relevant assessment year. Thus, the conditions of proviso to section 147 would apply. In other words, the assessing officer has to demonstrate that the escapement of income was due to failure on the part of the assessee to furnish all material facts relating to its assessment truly and correctly. On perusal of reasons recorded for reopening of assessment, it is observed that the assessing officer had no fresh tangible material in his possession while reopening the assessment under Section 147 of the Act. In the reasons recorded, the assessing officer has very clearly stated that on perusal of record, he came to know that confirmation of accounts relating to M/s. Goldplus Fabrics is not available on record. In the reasons, though, the assessing officer has alleged that assessee has not disclosed fully and truly all material facts relating to its assessment, however, in my view, it is a purely general observation without substantiating how the failure can be attributed to assessee. Only because confirmation of the sundry creditor was not available, it will not lead to believe that the income has escaped assessment. In the aforesaid view of the matter, I hold that reopening of assessment in the instant case is invalid.
12. Even otherwise also, assessee has a strong case on merits. As could be seen, while completing the original assessment, the assessing officer had added back the outstanding sundry creditors. However, while deciding assessee's appeal, the Tribunal had deleted the entire addition made by the assessing officer having found that the disputed additions represent outstanding balance of creditors and the purchases from the said creditors have been accepted. The Tribunal also took note of the fact that the payment made to creditors in subsequent years was not doubted.
13. Before me, learned counsel appearing for the assessee had demonstrated that in case of the present creditor also, repayment has been made. That being the factual position emerging on record, I am of the view that the addition made by the assessing officer is unsustainable. Accordingly, I delete it. Grounds are allowed.
14. In the result, the appeal is allowed.
Order pronounced in the open court on 4th October, 2022.
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