Assessment proceedings u/s 147 of Income Tax Act can be re-opened only when original assessment has not been made

The Income Tax Appellate Tribunal (ITAT, Delhi), in the case of M/s Nishit Fincap Private Limited Vs CIT National Faceless Appeal Centre (NFAC) held that the Assessment proceedings u/s 147 can be opened only when the original assessment has not been made as per provision of clause (b) of explanation of section 147 which states as:

b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ;

In this case, the assessee filed the return of income on 28.09.2008 declaring total income of Rs.18,230/-. The original assessment was completed u/s 143(3) on 03.12.2010 determining the total income at Rs.48,360/-. The Assessing Officer (AO) reopened assessment proceedings on the basis of information obtained from the Investigation Wing, according to which, during the search and seizure operations u/s 132/133A in the case of Mr. Surender Kumar Jain and group of cases and post search enquiries/verification, it is established that the Sh.S.K. Jain, who is known entry provider and also in the business of providing accommodation entries to various beneficiaries companies, had given accommodation entry of Rs.15 lakhs from his company namely M/s Shalini Holdings Ltd. to the assessee. Accordingly, the case of the assessee was re-opened by invoking the provision of clause (b) ofExplanation-2 of section 147 of the Act.

Before the ld. CIT(A), the assessee apart from challenging the addition on merit, challenged the validity of the reassessment proceedings. However, the ld. CIT(A) was also not satisfied with the arguments advanced by the assessee and upheld the validity of the reassessment proceedings. Similarly, he also upheld the additions made by the AO on merit.

Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.

ITAT in its order held that AO had merely stated that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment without specifying which material, the assessee has not disclosed, especially when every issue was examined during the course of original assessment u/s 143(3) by calling information u/s 133(6), which was complied with by the investing company. Further, ITAT held that the reassessment proceedings initiated by the AO and upheld by the Ld. CIT(A) is not in accordance with law. It relied on the order passed by Hon’ble high Court in the case of Atma Ram Properties (P) Ltd. vs DCIT reported in 343 ITR 141 (Del.) which is as follows:

“15. The reasons recorded above do state that the appellant assessee had failed to fully and truly disclose the facts but do not indicate why and how the assessee had failed to make full and true disclosure of the material facts. Mere repletion or quoting the language of the proviso is not sufficient. The basis of the averment/ statement should be either stated or should be apparent/lucid/ explained from the record.”