2017 (3) TMI 1604 - AT - Income Tax

Reopening of assessment - reasons to believe - Held that - It is clear that the reasons recorded for re-opening of the assessment was already examined by the AO in the assessment made u/s.143(3) r.w.s.147 of Income Tax Act on 30.12.2010 and the Ld.AR submitted that no fresh material is available to the AO to re-open the assessment. The Revenue could not establish that the income has escaped assessment due to the failure on the part of the assessee. Therefore, we hold that the notice issued u/s.148 lacks jurisdiction and the same is quashed. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Validity of re-opening of assessment u/s.147 of the Income Tax Act beyond four years.
2. Consideration of fresh material for re-opening assessment.
3. Interpretation of Sec.147 of the IT Act regarding income escaping assessment.

Analysis:

Issue 1: Validity of re-opening of assessment u/s.147 beyond four years
The appellant challenged the re-opening of assessment for the AY 2005-06 beyond four years from the end of the relevant assessment year. The appellant argued that the assessment was re-opened on the same issue without any fresh material, indicating a mere difference of opinion. The appellant contended that the notice u/s.148 lacked jurisdiction and should be quashed. The Tribunal held that for re-opening an assessment beyond four years, there must be a failure on the part of the assessee as per Sec.147 of the IT Act. Since the revenue failed to establish that income had escaped assessment due to the assessee's failure, the notice issued u/s.148 was deemed lacking jurisdiction and quashed.

Issue 2: Consideration of fresh material for re-opening assessment
The appellant argued that no fresh material was available to the Assessing Officer (AO) to re-open the assessment. The appellant contended that the reasons recorded for re-opening had already been examined by the AO in a previous assessment. The Tribunal agreed with the appellant's submission, emphasizing that without fresh material, the re-opening of assessment based on the same reasons was impermissible. The Tribunal concluded that the notice issued u/s.148 lacked jurisdiction due to the absence of new material to support the re-opening.

Issue 3: Interpretation of Sec.147 of the IT Act regarding income escaping assessment
The Tribunal examined the relevant provisions of Sec.147 of the IT Act to determine the legality of re-opening the assessment beyond four years. The Tribunal highlighted the conditions under which an assessment can be re-opened, emphasizing the requirement of failure on the part of the assessee for income to have escaped assessment. The Tribunal's analysis focused on the provisions of Sec.147 and the necessity of fresh material to support the re-opening of an assessment. The Tribunal's interpretation of the legal provisions led to the conclusion that the notice issued u/s.148 lacked jurisdiction in the case at hand.

In conclusion, the Tribunal allowed the appeal of the assessee, quashing the notice issued u/s.148 for re-opening the assessment beyond four years. The decision was based on the lack of fresh material supporting the re-opening and the absence of failure on the part of the assessee leading to income escaping assessment.