2017 (6) TMI 1182 - AT - Income Tax

Reopening of assessment - Held that - In the present case, for the AY 2008-09, a perusal of the reasons recorded shows that neither fresh information was in the possession of the AO nor the AO has recorded anywhere that the income of the assessee escaped assessment by stating the reasons of failure on the part of the assessee to disclose fully and truly of material facts necessary for his assessment for that AY. This being so, we are of the view that the re-opening by the AO upheld by the Ld.CIT(A) is unsustainable and the re-opening has been done only on the basis of a change of opinion, which is impermissible. In these circumstances, the reopening of the assessment is held to be bad in law and consequently quashed. Disallowance of the deduction u/s.36(1)(viia) - Held that - A perusal of the order of the Ld.CIT(A), in the present appeal clearly shows that the Ld.CIT(A) has only confirmed the order of the AO in the regular assessment and has also confirmed his proposal for enhancement by restricting deduction liable u/s.36(1)(viia) of the Act without dealing with the objections raised by the assessee. This being so, in the interest of natural justice, the entire gamut of the claim of deduction u/s.36(1)(viia) is restored to the file of the Ld.CIT(A) for re-adjudication de novo after granting the assessee adequate opportunity of being heard.

Summary

Issues:
1. Validity of re-opening of assessment for AY 2008-09.
2. Disallowance of deduction u/s.36(1)(viia) for AY 2008-09.
3. Validity of re-opening of assessment for AY 2009-10.
4. Disallowance of deduction u/s.36(1)(viia) for AY 2009-10.
5. Disallowance of deduction u/s.36(1)(viia) for AYs 2010-11 & 2011-12.
6. Disallowance of deduction u/s.36(1)(viia) for AY 2012-13.

1. Validity of re-opening of assessment for AY 2008-09:
The appellant challenged the re-opening of assessment for AY 2008-09 beyond the four-year period, alleging it was solely based on a change of opinion without fresh evidence. The Tribunal found the re-opening unsustainable as no new information was presented, and the AO failed to prove non-disclosure of material facts. Consequently, the assessment order under section 143(3) was quashed.

2. Disallowance of deduction u/s.36(1)(viia) for AY 2008-09:
The appellant contested the disallowance of the deduction u/s.36(1)(viia) for AY 2008-09. The Tribunal noted that the CIT(A) upheld the disallowance without addressing the objections raised by the appellant. In the interest of justice, the issue was remanded back to the CIT(A) for fresh adjudication after allowing the appellant a fair hearing.

3. Validity of re-opening of assessment for AY 2009-10:
The appellant disputed the re-opening of assessment for AY 2009-10, claiming it was based on a change of opinion and thus invalid. The Tribunal found the re-opening within the four-year period and supported by errors in deduction computation, making it a valid action under Sec.147.

4. Disallowance of deduction u/s.36(1)(viia) for AY 2009-10:
The disallowance of deduction u/s.36(1)(viia) for AY 2009-10 was challenged by the appellant. The Tribunal observed that the re-opening was valid within the statutory period, and the issue was remanded back to the CIT(A) for fresh consideration after granting the appellant a proper hearing.

5. Disallowance of deduction u/s.36(1)(viia) for AYs 2010-11 & 2011-12:
The disallowance of deduction u/s.36(1)(viia) for AYs 2010-11 & 2011-12 was contested. The Tribunal upheld the re-opening of assessment and remanded the issue back to the CIT(A) for a fresh decision on the deduction after providing the appellant with a fair opportunity to present their case.

6. Disallowance of deduction u/s.36(1)(viia) for AY 2012-13:
The appellant challenged the disallowance of the deduction u/s.36(1)(viia) for AY 2012-13. The Tribunal decided to remand the issue to the CIT(A) for a fresh adjudication in line with the findings for AY 2009-10, ensuring a fair hearing for the appellant.

In conclusion, the Tribunal allowed some appeals, partly allowed others for statistical purposes, and remanded various issues back to the CIT(A) for re-adjudication, emphasizing fair hearings and proper consideration of objections.