2013 (11) TMI 1628 - AT - Income Tax

Reopening of assessment - Held that - We quash the Order of the Assessing Officer passed under section 143(3) read with section 147 of the I.T. Act 1961.

Summary

Issues:
1. Admissibility of additional grounds raised by the assessee before the CIT(A).
2. Validity of notice issued under section 148 by the Assessing Officer.

Analysis:

Issue 1: Admissibility of Additional Grounds
The assessee raised additional grounds before the CIT(A) challenging the re-opening of assessment under section 147. The CIT(A) held that the additional grounds were not admissible as the assessee failed to provide good reasons for not including them in the original appeal memo. The CIT(A) further stated that even if the grounds were entertainable, they lacked merit and were to be dismissed. The CIT(A) emphasized that the Assessing Officer (AO) had valid reasons for re-opening the assessment, citing the Supreme Court's decision in the case of CIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. and the Madras High Court's decision in ITO Vs. K.M. Pachiappan. Consequently, the CIT(A) rejected the additional ground raised by the assessee.

Issue 2: Validity of Notice under Section 148
The assessee appealed to the Tribunal challenging the CIT(A)'s decision regarding the validity of the notice issued under section 148 by the AO. The Tribunal considered the arguments presented by both parties. The assessee's counsel contended that there was no tangible material available to support the re-opening of the assessment. The counsel relied on various judgments to support this claim. On the other hand, the Departmental Representative (D.R.) referred to the Supreme Court's decision in ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. The Tribunal referred to a previous case where the issue of tangible material for re-opening assessments was discussed. The Tribunal emphasized the necessity of tangible material to support the belief of income escaping assessment. Citing various judgments, the Tribunal concluded that in the absence of tangible material, the reassessment proceedings initiated by the AO were invalid. Consequently, the Tribunal quashed the order passed under section 143(3) read with section 147 of the Income Tax Act, 1961.

In conclusion, the Tribunal partially allowed the appeal of the assessee based on the invalidity of the reassessment proceedings due to the lack of tangible material supporting the re-opening of the assessment.