Reopening of assessment under section 147 for mistakes that could be rectified under section 154 is invalid
Brief : The High Court held that notice issued for reopening the assessment which could be rectified under section 154 is invalid.
Citation : Hindustan Unilever v. DCIT (Bombay High Court) (Writ Petiiton No. 85 of 2009)
Court : Bombay High Court
Facts:-Assessing Officer (AO) reopened the assessment of the taxpayer by issuing a notice on four grounds. One of the grounds was income had escaped assessment due to a computation error in the assessment order.
Contentions of the taxpayer
1. Alternative remedy available with the AO.
2. Error which took place in the computation of income by the AO could have been rectified under section 154.
3. Exercising the power of reopening the assessment on the ground of a simple computation error is a matter of serious prejudice to the taxpayer, as in such a case the entire assessment would be reopened, including all other issues which came to the notice of the AO during the course of reassessment proceedings.
Issues before High Court :-Whether reopening of assessment under section 147 for mistakes that could be rectified under section 154 is valid?
Observations and Ruling of the High Court
1. Section 154 empowers the AO to amend any order passed by him, with a view to rectify any mistake apparent from the record.
2. Where power granted to the AO under section 154 is adequate to rectify a mistake apparent from record in an assessment order, the AO must take recourse to that power as against the wider power to reopen the assessment under section 147.
3. Where the statute provides for several remedies, the choice of the remedy must be appropriate to the underlying basis and object of the grant of remedy.
4. The High Court thus held that notice issued for reopening the assessment which could be rectified under section 154 is invalid.