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Hind Globe Links, Delhi vs. ACIT - (Income Tax Appellate Tribunal) (04 Oct 2022)

Assessing officer has to demonstrate that the escapement of income was due to failure on the part of the assessee


Direct Taxation

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 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 determining the total income at Rs.3,68,99,746. Against the assessment order so passed, assessee preferred an appeal before learned Commissioner (Appeals) and thereafter before the Tribunal.

Undisputedly, in assessee's case, original assessment was completed under Section 143(3) of the Act. Whereas, the assessing officer has issued notice under Section 148 of the Act, 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. 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 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, 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. Reopening of assessment in the instant case is invalid.

Even otherwise also, assessee has a strong case on merits. 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. The addition made by the assessing officer is unsustainable. Appeal allowed.


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