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Judgment
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2005-06, arises against the Commissioner of Income Tax (Appeals)-29 [in short, the “CIT(A)”], Delhi’s order dated 23.09.2025 passed in order no. 10205/2019-20 involving proceedings under section 254/147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
We notice during the course of hearing that the assessee/appellant canvasses its first and foremost substantive ground challenging validity of impugned reopening itself. Learned counsel seeks to invite our attention to the Assessing Officer’s reopening reasons recorded in its case; reading as under:
“ Reasons for notice u/s 148 of the Act, 1961 The assessment u/s 143(3) of the IT Act, in the above mentioned case for A.Y.2005-06 was completed on 28.12.2007 determining total income of Rs.71,01,18,489/-. From the perusal of the record it is revealed that the assessee has incurred an expenditure of Rs.827.20 lacs on 'technical know-how and agency charges'. As the 'technical know-how and agency charges' acquired by the assessee is giving benefit to assessee of enduring nature the same is not an allowable expenditure in the nature of revenue.
Further, on perusal of annexure 16 to the 3CD report, it is revealed that the assessee has disclosed prior period income of Rs.71,43,999/- and the same is not added to the total income of the assessee. By doing so, the assessee has not disclosed the total income correctly to the extent of Rs.898.63 lacs (Rs.827.20 lacs. On account of 'technical know how & agency charges' +Rs.71.43 lacs on account of prior period income). Based on the above facts, I have reason to believe that the income of the assessee chargeable to tax to the extent of Rs.898.63 lacs has escaped assessment.”
There does not appear to be much a dispute between the parties that not only the learned Assessing Officer had framed a regular assessment u/s 143(3) of the Act in the assessee’s case on 28.12.2007 but also he set into motion the impugned reopening beyond a period of four years from the end of the impugned assessment year; and, that too, without even indicating that there was any failure on the assessee’s part in not disclosing all the particulars “fully” and “truly” in the former ground . It rather emerges that he has only gone by the assessee’s Form 3CD report(supra) read withy Annexures 16 thereto, as admitted in the above extracted reopening reasons.
Faced with this situation, we hereby reject the revenue’s vehement contentions supporting the impugned reopening in light of section 147 r.w. 1st Proviso in Hindustan Lever Ltd vs. R. B. Wadkar, ACIT (2004) 268 ITR 332 (Bom) that such a failure on the learned Assessing Officer’s part is non-recording of assessee’s failure indeed vitiates the reopening itself as there is no scope for any subsequent addition or substitution thereof at a latter stage. We accordingly quashed the impugned reopening in very terms.
All other remaining pleadings between the parties on merits stand rendered academic.
This assessee’s appeal is allowed.