CA Suraj R. Agrawal
Facts of the case:
a. Assessee had filed return of income on 27-10-2006 u/s 139(1) and original assessment was done by AO u/s 143(3) vide order dated 15.12.2008.
b. Subsequently, this case was reopened u/s 147 and AO framed re-assessment order dated 31.12.2012 u/s 143 read with 147 of the Income Tax Act 1961.
c. Against this, the Assessee filed an appeal before Ld. CIT (A), wherein he challenged the action of the AO of re-opening of assessment u/s 147 and also challenged additions made by the AO on merits.
d. Ld. CIT (A) did not accept the submissions of the assessee with respect to re-opening and therefore, re-opening was upheld by the Ld. CIT (A). On merits also, no relief was given by the Ld. CIT (A) to the assessee.
Issue put before (ITAT Mumbai):
The learned CIT (Appeals) erred in confirming action of the A.O. for reopening the assessment without properly appreciating the fact of the case and laws applicable thereto.
The learned CIT (Appeals) erred in confirming action of the A.O. for reopening the assessment on the basis of audit objection which is not permissible in law.
Contentions of Appellant:
a. The reopening was bad in law.
b. Reasons have been recorded without there being any fresh tangible material coming into the possession of the AO.
c. AO has recorded the Reasons on the basis of same set of material and records which were available at the time of framing of original assessment u/s 143(3).
d. There was change of opinion on the part of AO while recording impugned Reasons and therefore reopening of the case was invalid on this ground also.
Contention by Revenue:
a. Reopening has been done within the period of four years from the end of the impugned assessment year.
b. There was no change of opinion, because in the original proceedings, various aspects were over-looked by the AO and after reconsidering the material available on record, it was noticed by the AO that income has escaped from assessment.
Ruling of Honorable (ITAT Mumbai):
a. ‘Reasons’ have been recorded by the AO on the basis of records available with him since the time of framing of original assessment proceedings u/s 143(3) vide order dated 15.12.2008.
b. There was no fresh tangible material in the possession of AO at the time of recording of impugned reasons.
c. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case remained uncontroverted.
d. It was held that even in the case of original assessment order having been passed u/s 143(1), it is mandatory for the AO to have in its possession, fresh tangible material before reopening of the case.
e. Reopening done by Ld. AO in the absence of fresh tangible material is invalid and bad in law.
f. Therefore, the initiation of reassessment proceedings was not valid. Thus, re-assessment order framed in pursuance to invalid reopening is illegal; the same is hereby quashed. Since assessment order has been quashed on jurisdictional ground itself, other grounds are not being adjudicated.
g. The appeal of the assessee is partly allowed.
Key Take Away
