INCOME TAX ACT, 1961

Section 147 Section 143(2) Section 143(3)

Reassessment - Validity - Tangible material - Reason to believe

Assessee was engaged in the business of Modelling, Cricket Commentary, Journalism and Consulting & BPCL Dealership. The return of income was processed by Revenue under section 143(1) and admittedly no scrutiny assessment under section 143(3) was originally framed by revenue. AO observed from enclosures of the return of income filed by assessee with Revenue that assessee had sold shares held in his name, minor children and wife, during the impugned year under consideration. The AO observed that the assessee had not offered Rs. 4.25 crores from the sale proceeds of the shares claimed it to be payment towards overriding garnishee attachment on the shares by Indian Bank. The AO observed that it was not an encumbrance attached to the shares. AO observed that these claims of the assessee were found to be not correct and hence, in view of the AO the income of the assessee had escaped assessment, hence concluded assessments were reopened by issuance of notice under section 148. Notice under section 148 was issued by AO within 4 years from the end of the assessment year. CIT(A) confirmed order of AO. Held: It was admitted position that the return of income was not originally scrutinized by revenue under section 143(2) read with section 143(3) and merely processing of return of income was done within provisions of section 143(1) which cannot be equated with scrutiny assessment under section 143(3) read with section 143(2). Thus, Tribunal rejected the contentions of the assessee and upheld the reopening of the concluded assessment by revenue under section 147. While upholding reopening of the concluded assessment under section 147 in the instant case, one noted that there was tangible material before the AO to reopen the concluded assessment as the assessee was claiming huge exemption of income by making incomplete, untrue and wrong claim before the AO and scrutiny assessment having not been made earlier by revenue by invoking provisions of section 143(3) read with section 143(2) while originally processing return of income, and reopening of the concluded assessment under section 147 is sought to be done within four years from the end of assessment, the revenue was within its right to reopen the concluded assessment under section 147. Hence, in the instant case, revenue was within its right to reopen the concluded assessment under section 147 and the reopening of the concluded assessment by revenue in the instant case was upheld by Tribunal.

Relied:CIT v. Orient Craft Limited (2013) 354 ITR 536 (Del.) : 2013 TaxPub(DT) 1623 (Del-HC), ACIT v. Rajesh Jhaveri Stock Brokers Private Limited (2007) 291 ITR 500 (SC) : 2007 TaxPub(DT) 1257 (SC), CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC), CIT v. Kelvinator of India Ltd. (2010) 320 IT 561 (SC) : 2010 TaxPub(DT) 1335 (SC), CIT v. P.V.s. Beedies (P) Ltd. (1999) 237 ITR 13 (SC) : 1999 TaxPub(DT0 225 (SC) and New Delhi Television Ltd. v. Dy.CIt (2020) 116 Taxmann.com 151 (SC) : 2020 TaxPub(DT) 1703 (SC).

REFERRED : Guffic Chem (P) Ltd. v. CIT (2011) 332 ITR 602 (SC) : 2011 TAxPub(DT) 978 (SC), CIT v. Orident Craft Ltd. 92013) 354 ITR 536 (Del) : 2013 TaxPub(DT) 1623 (Del-HC), Tanmac India v. Dy.Ct (2017) 78 Taxmann.com 155 (Mad0 : 2017 TaxPub(DT) 582 (Mad-HC), Tenzing Match Works v. Dy.CIt TCA No. 702 of 2009, vide judgment, dated 11-7-2019 : 2020 TAxPub(DT) 126 (Mad-HC), CIT v. S&S Power Switchgear Ltd. (2018) 92 Taxmann.com 429 (Mad) : 2018 TaxPub(DT) 2150 (Mad-HC), Girilal & Co. ITO (2016) 387 ITR 122 (SC) : 2016 TaxPub(DT) 3821 (SC), Girilal & Co. v. ITO (2016) 387 ITR 122 (SC) : 2016 TaxPub(DT) 3821 (SC) < Smt. A. Sridevi v. ITO (2018) 409 ITR 502 (Mad-HC) : 2018 TAxPub(DT) 7782 (Mad-HC), Jayaram Paper Mills Ltd. v. CIT (2010) 321 ITR 56 (Mad) : 2010 TaxPub(DT) 985 (Mad-HC), CIT v. Ideal Garden Complex Private Limited (2012) 340 ITR 609 (Mad.) : 2012 TaxPub(DT) 669 (Mad-HC), Honda Siel Power Products Ltd. v. Dy. CIT (2012) 340 ITR 64 (SC) : 2012 TaxPub(DT) 682 (SC) and Hinduja Foundation v. ITO WP No. 2866/2018, vide Order, dated 15-2-2019 : 2019 TaxPub(DT) 2095 (Bom-HC) and CIT v. Sitaldas Tirathdas (1961) 41 ITR 367 (SC) : 1961 TaxPub(DT) 145 (SC), Dy.CIt v. Jayachandran (2018) 406 ITR 1 (SC) : 2018 TaxPub(DT0 2011 (SC), R.BN. Gosai A. v. Yashpal DhirJudgment, dated 23-10-1992, G. Kumar v. Samuthiradevi, vide Judgment, dated 19-12-2012, CIT v. Chemech Laboratories Ltd. dated 23-12-2016 : 2017 TaxPub(DT) 111 (Mad-HC), H.M. Publishers Holdings Ltd. AAr No. 1238 of 2012 : 2018 TaxPub(DT) 3132 (AAR), A.R. Real Estate developers (P) Ltd. v. ITO ITA No. 804/Chny/2019, dated 18-9-2016 : 2019 TaxPub(DT0 7356 (chen-Trib) and Empee Holdings Ltd. v. Dy. CIT ITA No. 1503/Chny/2014 for assessment year 2005-06, dated 7-11-2019 : 2019 TaxPub(DT) 7629 (Chen-Trib).

FAVOUR : Against the assessee.

A.Y. : 2001-02

INCOME TAX ACT, 1961

Section 4 Section 45

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