Case Law Details
HV Transmissions Ltd. Vs. ITO (ITAT Mumbai)- Section 147 applies both to section 143(1) as well as section 143(3) and, therefore, except to the extent that a reassessment notice issued u/s 148 in a case where the original assessment was made u/s 143(1) cannot be challenged on the ground of a mere change of opinion, still it is open to an assessee to challenge the notice on the ground that there is no reason to believe that income chargeable to tax has escaped assessment.
As regards the decision of Hon’ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) cited by the Revenue and relied upon by the Accountant Member, the Third Member held that the same was applicable in cases where the return was processed u/s 143(1) but later on notice was issued u/s 148 and the assessee challenges the notice on the ground that it is prompted by a mere change of opinion. The Third Member then referred to the decision of Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India (supra) wherein it was held that there should be “tangible material” to come to the conclusion that income had escaped assessment. Relying on the said decision, it was held by the Third Member that while resorting to section 147 even in a case where only an intimation had been issued u/s 143(1)(a), it is essential that the AO should have before him tangible material justifying his reason to believe that income had escaped assessment. Since there was no such tangible material before the AO from which he could entertain the belief that income of the assessee chargeable to tax had escaped assessment, the Third Member held that reassessment proceedings initiated by the AO were liable to be quashed on the ground that there was no tangible material before the AO even though the assessment was completed originally u/s 143(1). In our opinion, the Third Member decision of the Tribunal in the case of Telco Dadaji Dhackjee Ltd. (supra) is squarely applicable in the present case and respectfully following the same, we hold that the initiation of reassessment proceedings by the AO itself was bad in law and the reassessment completed in pursuance thereof is liable to be quashed being invalid.We order accordingly and allow ground No.1 of the assessee’ s appeal.
As a result of our decision rendered above on the preliminary issue quashing/cancelling the assessment made by the AO u/s 143(3) read with section 147, the other issues raised in the appeals of the assessee and the Revenue in respect of additions made in the said assessment have become infructuous and we do not deem it necessary or expedient to decide the same.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
I.T.A. No. 2230/Mum/2010., I.T.A. No.2476/Mum/2010, Assessment Year: 2001- 02.
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