2010 (5) TMI 703 - AT - Income Tax

Summary

Issues involved: Jurisdiction of Assessing Officer to reopen assessment under section 147 after dropping proceedings under section 263.

The assessee raised a ground challenging the order passed by the Assessing Officer under section 147, contending that there was no income which escaped assessment and therefore the order should have been cancelled. The assessee also argued that since the Commissioner of Income-tax dropped the proposed proceedings under section 263 after accepting explanations, the Assessing Officer had no jurisdiction to issue notice under section 148 and frame an income escaping assessment. The Tribunal considered a similar legal issue in the assessee's case for the preceding assessment year and held that the Assessing Officer had no jurisdiction to reopen the assessment under section 147 after proceedings under section 263 were dropped. The Tribunal relied on the judgment of the Madras High Court and concluded that the Assessing Officer cannot circumvent the order of the Commissioner of Income-tax passed under section 263 by reopening the assessment under section 147.

The Revenue argued that the provisions of section 263 and section 147 operate independently, with the scope of revision under section 263 being narrower compared to the jurisdiction of the Assessing Officer under section 147. The Assessing Officer's jurisdiction under section 147 is focused on the escapement of income based on reasons recorded by him, while the Commissioner of Income-tax's role under section 263 is to determine if the order is erroneous and prejudicial to the Revenue's interests. The Revenue contended that the Assessing Officer's jurisdiction under section 147 is not affected by the dropping of proceedings under section 263.

The Tribunal analyzed the legal provisions and previous decisions, noting that the issue raised by the assessee was identical to the one decided in the preceding assessment year. The Tribunal followed the precedent set by its earlier decision in the assessee's case for the prior year, where it was held that the Assessing Officer had no jurisdiction to reopen the assessment under section 147 after proceedings under section 263 were dropped. Therefore, the Tribunal held that the order of the Assessing Officer reopening the assessment for the impugned year was without jurisdiction and set it aside. Consequently, the appeal filed by the Revenue was deemed infructuous. The Tribunal emphasized the importance of judicial precedence and discipline in following earlier decisions unless there are valid reasons to differ. The appeals were decided on the jurisdictional issue, rendering other grounds raised on merit academic and not considered. As a result, the appeal filed by the assessee was allowed, and the appeal filed by the Revenue was dismissed as infructuous.