2010 (8) TMI 1069 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) cancelling reassessment proceedings for assessment year 2000-01.

Summary:
1. The Revenue appealed against the CIT(A)'s order cancelling reassessment proceedings for the assessment year 2000-01.
2. The original assessment disallowed provision for trade guarantees claimed by the assessee under 'operating & administrative expenses'.
3. The AO disallowed the provision as it was in the nature of a contingent liability and not allowable under the I.T. Act.
4. The AO reopened the assessment, disallowing the write back of provision for trade guarantees, which had been allowed in earlier years.
5. The CIT(A) held that the reopening of assessment was not valid as it was beyond four years and amounted to double taxation of the same income.
6. The ITAT upheld the CIT(A)'s decision, citing that the AO's action in reopening the assessment beyond four years was not in accordance with the law.
7. The appeal of the Revenue was dismissed, and the order of the CIT(A) was upheld.

This judgment highlights the importance of following legal procedures and principles in reassessment proceedings to avoid double taxation and ensure fairness in tax assessments.