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2012 (12) TMI 207 - AT - Income TaxRe-assessment proceedings - proceedings u/s 147 were initiated on the ground that the assessee has claimed excess deduction u/s 80HHC Held that - AO accepted the returned income claiming the deduction u/s 80HHC of the Act - Once this was done, the AO has no jurisdiction to go on making further additions, while the same has been done by the AO in this case - AO may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the assessment proceedings though the reasons for such issue were not included in the notice; however, if after issuing a notice under s. 148, the AO accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as matter of fact not escaped assessment, it is not open to him independently to assess some other income in favor of assessee
Issues Involved:
1. Validity of reassessment proceedings under Section 147. 2. Scope of reassessment proceedings and whether it can extend beyond the original reasons for reopening. 3. Treatment of intimation under Section 143(1) as an assessment order. 4. Adequacy of consideration of objections raised by the assessee. Detailed Analysis: 1. Validity of Reassessment Proceedings under Section 147: The assessee contended that the reassessment proceedings initiated under Section 147 were invalid because the Assessing Officer (AO) did not dispose of the objections raised against the reassessment proceedings before passing the order. The AO had reopened the assessment on the grounds that the assessee claimed excess deduction under Section 80HHC. The learned CIT(A) confirmed the AO's action, stating that the AO had disposed of the objections by a speaking order and that the reassessment was justified based on the findings from a subsequent survey. The Tribunal, however, found that the AO had allowed the deduction under Section 80HHC as claimed by the assessee and proceeded to make other additions, which was beyond his jurisdiction. The Tribunal relied on various case laws, including CIT vs. Shri Ram Singh and CIT vs. Jet Airways (I) Ltd., to conclude that if the AO accepts the assessee's claim regarding the reason for reopening, he cannot independently assess other incomes. 2. Scope of Reassessment Proceedings: The AO argued that once an assessment is reopened, it is open for all issues, not just the issue for which it was originally reopened. The learned CIT(A) supported this view, citing that the findings from the survey indicated other instances of income escapement, which justified considering these issues in the reopened assessment. However, the Tribunal held that the AO's jurisdiction is limited to the income for which he had reason to believe had escaped assessment. If the AO accepts that the income initially believed to have escaped assessment did not actually escape, he cannot assess other incomes independently without issuing a fresh notice under Section 148. 3. Treatment of Intimation under Section 143(1): The assessee argued that an intimation under Section 143(1) should be treated as an assessment order, relying on the Bombay High Court's decision in Anderson Marine & Sons Pvt. Ltd. The learned CIT(A) and the Tribunal rejected this argument, clarifying that the decision in Anderson Marine related to the revision of intimation under Section 263 and did not equate intimation under Section 143(1) to an assessment order. 4. Adequacy of Consideration of Objections: The assessee claimed that the AO did not adequately consider the objections raised against the reassessment proceedings. The learned CIT(A) found that the AO had addressed the objections in the assessment order and had communicated the reasons for reopening the assessment. The Tribunal, however, emphasized that the AO's failure to assess the income initially believed to have escaped assessment invalidated his jurisdiction to make further additions, thus rendering the reassessment proceedings beyond his jurisdiction. Conclusion: The Tribunal quashed the reassessment order, holding that the AO exceeded his jurisdiction by making additions unrelated to the original reason for reopening the assessment. Consequently, the assessee's appeal was allowed, and the Revenue's appeal was dismissed.
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