2011 (12) TMI 135 - HC - Income Tax

Validity of re-opening of assessment u/s 147/148 of the Act assessee had not questioned the re-opening before the A.O. and the CIT change in opinion of A.O. - Held that - The relevant facts/materials were available before the tribunal, when the assessee raised the additional plea challenging the very initiation of re-assessment proceedings on the ground that the jurisdictional pre-conditions were not satisfied. No new or fresh evidence was adduced before the tribunal. If the jurisdictional pre-conditions are missing and are absent, the assessee can object and question the reopening in the appellate proceedings. Further, the tribunal has observed that no fresh material had come to the knowledge or information of the Assessing Officer after passing of the first assessment order. Therefore, this is a case of change of opinion as this issue in question was examined in the original assessment proceedings.- Decided against the Revenue

Summary

Issues:
1. Validity of re-opening under Section 147/148 of the Income Tax Act.
2. Entertaining and deciding additional ground by the tribunal.
3. Merit of the tribunal's decision on communication expenses.

Issue 1: Validity of re-opening under Section 147/148 of the Income Tax Act:
The Revenue challenged the tribunal's decision on the validity of re-opening under Section 147/148 of the Income Tax Act. The Revenue argued that the respondent had not followed the procedure prescribed in GKN Driveshafts (India) Ltd. vs. ITO, (2003) 259 ITR 19 (SC) and should not have been allowed to raise the additional ground questioning the re-opening. However, the court held that an assessee can object to re-opening in appellate proceedings if jurisdictional pre-conditions are missing, as it goes to the root of the matter. The court emphasized that filing a writ petition is not mandatory, and objection to re-opening can be raised in appellate proceedings.

Issue 2: Entertaining and deciding additional ground by the tribunal:
The court referred to judgments like Jute Corporation of India Ltd. vs. CIT and National Thermal Power Corporation Ltd. vs. CIT, emphasizing that the tribunal has the power to entertain additional grounds even if not raised before the Income-tax Officer. The court highlighted that if the facts and material available give rise to a pure question of law, the tribunal should not have difficulty in entertaining the additional ground. In the present case, the tribunal considered the additional ground challenging the initiation of re-assessment proceedings as the facts were already on record, and no new evidence was adduced before the tribunal.

Issue 3: Merit of the tribunal's decision on communication expenses:
On the merit of the tribunal's decision regarding communication expenses, the tribunal found that the issue had been examined in the original assessment proceedings. The tribunal referred to the questionnaire issued by the Assessing Officer and the reply of the assessee, demonstrating that the communication expenses were based on management's estimate pending finalization of an agreement. The tribunal concluded that this was a case of a change of opinion as the issue had been deliberated upon in the original assessment proceedings. The court upheld the tribunal's decision, noting that the appellant failed to demonstrate any error in the tribunal's findings.

In conclusion, the court dismissed the appeal, finding no merit in the contentions raised by the Revenue.