Reopening of assessment u/s 147 without bringing any fresh material on record is invalid

The assessee has filed ‘NIL’ income on 29/10/2007. The return was duly processed u/s 143(1) of the Income Tax Act (The Act), the case of the assessee has been taken up for scrutiny and assessment order u/s 153A read with 143(3) of the Act dated 29/12/2011 was passed at income of Rs.3,65,75,000/- by making disallowance on account of unexplained cash credits of Rs. 3,50,00,000/-, on account of commission of Rs. 1,75,000/- and on account of unsecured loan of Rs.14,14,00,000/-.

Later, the case was selected for scrutiny u/s. 147 read with Section 148 of the Act. The notice u/s. 148 of the Act was issued on 26/02/2014, the representative of the assessee has participated in the assessment proceedings. The assessment order came to be passed on 20/03/2015 by making addition of Rs. 45,00,000/- on account of unexplained income from share applicants.

Against the assessment order dated 20/03/2015 passed u/s 148 read with Section 147 of the Act, the assessee has preferred an appeal before the CIT(A). The Ld.CIT(A) by order dated 07/09/2018, dismissed the appeal filed by the assessee. Aggrieved by the order impugned dated 07/09/2018, the assessee has preferred the appeal before tribunal.

Before tribunal the assessee submitted that, the impugned reassessment proceedings has been initiated on the basis of very same information available with the Assessing Officer at the time of original assessment order dated 29/12/2011, wherein the addition of Rs. 3,53,50,00,000/- was made u/s 68 of the Act. Further submitted that, the said addition were also include the amounts received from two entities namely M/s Oracle Cables P. Ltd and M/s Multi-Semi Conductors P. Ltd. out of three entities named in the reason. However, no addition was made for the third entity i.e. M/s Indlon Hosiery P. Ltd. for Rs. 15,00,000/-being share capitation money received. Further submitted that, all the three additions have been deleted on merit by CIT(A) which has been confirmed by this Tribunal in ITA No. 565/Del/2014.

The Ld. Counsel for the assessee further submitted that, the addition u/s 153A has been made in the absence of any incriminating material found in the course of search proceedings. Therefore, submitted that the addition made by the Ld. A.O which has been confirmed by the Ld.CIT(A) is null and void. Further contended that, the assessee has discharged its initial burden as required under the Act to prove the nature and source of the cash credit of Rs. 45,00,000/- but the authorities erroneously taken adverse view against the assessee. Per contra, the Ld. DR has relied on the orders of the Lower Authorities and contended that, the assessee has not proved the genuineness of the transaction and submitted that, no interference from the Tribunal is called for.

ITAT stated that the Ld. A.O has made an addition of Rs. 45,00,000/- u/s 68 of the Act, on the ground that the assessee failed to prove the identity and creditworthiness of share applicants i.e. Indlon Hosiery P. Ltd., M/s Multi-tech Semi Conductors P. Ltd. and M/s Oracle Cables P. Ltd. The above said information were very well in existence in the hands of the Ld. A.O when the original assessment order was passed on 29/12/2011. Therefore, reopening of assessment was without any fresh tangible material. It is well settled law that, in the absence of fresh tangible material, the action u/s 147 of the Act by the A.O is not tenable under the law. Accordingly, it allowed the appeal filed by the assessee.