Source: https://www.taxpundit.org/case-summary/high-courts/307-tropex-promotion-trading-ltd-vs-cit
Timestamp: 2019-04-22 04:08:59+00:00

Document:
he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year).
7. It is pointed out by Mr. Bansal that as far as the AY 1986-87 is concerned it is not even the case of the Revenue that there was an absence of full and true disclosure by the Assessee of “all material facts necessary” for the assessment and, therefore, Section 147 (a) was not attracted in the present case. He further submitted that for the purposes of Section 147(b) the AO was required “in consequence of information in his possession” to form reasons to believe that income chargeable to tax had escaped assessment. Mr. Bansal submitted that there was no „information‟ in possession of the AO specific to AY 1986-87 which could have formed the basis of the formation of his opinion that income had escaped assessment. He submitted that merely because those very three items were the subject matter of scrutiny for AY 1987-88, the AO decided to reopen the assessment for AY 1986-87. As far as AY 1987-88 is concerned, it is pointed out that after the AO made the additions on the above three items the matter was taken up in appeal to the CIT(A) and thereafter on one aspect to the ITAT. Ultimately, the additions made on all three items were deleted.
8. Mr. Bansal pointed out that for AY 1987-88, specific to the issue of increase in share capital, the CIT (A) had called for a remand report from the AO who in the remand report admitted to the genuineness of the deposits of share capital. He accordingly submitted that since the very basis for reopening the assessment for AY 1986-87 viz., the additions on the said three items AY 1987-88, was rendered non-existent in view of the subsequent developments. Therefore, there could be no justification in persisting with the reopening of the assessment for AY 1986-87.
9. Mr. Bansal relied on the decisions of this Court in Oracle India Pvt.Ltd. v. Assistant Commissioner of Income Tax (2017) 83 Taxman.com 368(Del), HCL Technologies Ltd. v. Deputy Commissioner of Income Tax Central Circle-2 (decision dated 20th July 2017 WP(C) 8164 of 2010) and Unitech Ltd. Deputy Commissioner of Income Tax, Circle-27(1), New Delhi (order dated 24th July 2017 in WP(C) 12324 of 2015). He also referred to the observations of the Supreme Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd. (2010) 187 Taxman 312 (SC).
10. Mr. Ruchir Bhatia, learned Senior Standing Counsel for the Revenue, on the other hand submitted that merely because in respect of the above three items no additions were made to the income of the Assessee for AY 1987- 88, it would make no difference to the reopening of the assessment under Section 147 (b) of the Act as stood at the relevant time for AY 1986-87. He referred to the decisions in Phool Chand Bajrang Lal v. Income Tax Officer (1963) 203 ITR 456 (SC), Kalyanji Mavji & Co. v. Commissioner of Income Tax (1976) 102 ITR 287 (SC), Claggett Brachi Co. Ltd. v. Commissioner of Income Tax (1989) 177 ITR 409 (SC) and Max Ventures Investment Holdings P. Ltd. v. Income Tax Officer 2019-TIOL-686-HCDEL-IT.
12. Thus in the above case, the basis for the re-opening the assessment for AY 2011-12 was not merely the assessment order for the subsequent AY (2012-13) but other material/information which could support the reasons for reopening the assessment.
14. In the present case, the reasons for reopening the assessment do not make any reference whatsoever to any „information‟ in possession of the AO that persuaded him to form the belief that for AY 1986-87 income had escaped assessment. The only so-called „information‟ available with the AO was the assessment order for AY 1987-88.
15. It is not possible for this Court at a distance in time of three decades after the event, to be unmindful of the fact that for AY 1987-88, ultimately, there were no additions made to the income of the Assessee. If that was the only basis for reopening the assessment of AY 1986-87 it would be an entirely futile exercise for this Court to allow the reopening of the assessment for 1986-87 to remain.
17. Consequently, this Court is satisfied that in the present case the jurisdictional requirement of Section 147(b) of the Act as stood at the relevant time is not fulfilled. There was no information available to the AO specific to AY 1986-87 on the basis of which he could have formed a belief that income has escaped assessment.
18. Consequently question (1) is answered in the negative i.e. in favour of the Assessee and against the Revenue. In that view of the matter, the Court need not go into the merits of the additions made by the AO which are accordingly hereby set aside. Question (2) is, therefore, also answered in the negative i.e. in favour of the Assessee and against the Revenue. The impugned order of the ITAT is set aside and the appeal is allowed but, in the circumstances, with no orders as to costs.

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