The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that reassessment proceeding cannot be challenged if the assessee suppressed material facts by not filing an Income Tax Return.
The Appellant was represented by Sh. Sachin Kumar and the Respondent were represented by Sh. Sanjay Kumar.
The assessee engaged in the hospitality business for which did not file any return of income under section 139(1) of the Act. The Assessing Officer noticed that the assessee during the year had contract receipts of Rs.5,36,462/- and interest income of Rs.88,000/ and initiated proceeding under section 147 of the Act. In absence of any cooperation from the assessee, the Assessing Officer issued notices under section 133(6) of the Act. Being not responsive the Assessing Officer determined the total income at Rs.6,24,462/-.
The assessee challenged the assessment order on the issue of the validity of reopening of assessment under section 147 of the Act as well as on the addition made. The Commissioner (Appeals) sustained the addition to the extent of Rs.1,49,274/- and deleted the balance amount.
The assessee contended that the approving authority has not recorded a valid satisfaction for issuance of notice under section148 of the Act. Further stated that as per Form 26AS, the assessee had an income of Rs.88,000/-, whereas the Assessing Officer has wrongly taken an amount of Rs.5,36,462/- as contract receipts subjected to TDS under section 194C of the Act.
It was observed that the assessee has accepted the addition sustained by Commissioner (Appeals). Further observed that the assessee despite having income from operations to the tune of Rs.29,85,471/-, as shown in the profit and loss account furnished before Commissioner (Appeals), did not file any return of income under section 139(1) of the Act. The Assessing Officer had to complete the assessment ex-parte, to the best of his judgment under section 144 of the Act due to the non-compliance of the assessee and the Assessing Officer had tangible material available with him to indicate that the assessee had earned income, but it was not offered to tax.
Shri Saktijit Dey, Judicial Member held that “when the assessee has suppressed material facts by not filing a return of income and other details in the course of assessment proceeding he cannot challenge the validity of the reassessment proceeding.” The appeal filed by the assessee got dismissed.
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