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2014 (5) TMI 36 - AT - Income TaxValidity of reopening of assessment u/s 147 of the Act Bar of limitation - Proceedings initiated after four years Held that - The AO has completed the assessment u/s 143(3) r.w.s.147 of the Act on 26.8.2011 - CIT(A) annulled the assessment after observing that the reasons enumerated by AO for his action of reopening of assessment are not tenable and justified Relying upon M/s ICICI Home Finance Co.Ltd V/s ACIT 2012 (8) TMI 312 - BOMBAY HIGH COURT . The same issue has been considered by AO as well as by CIT(A) and the Tribunal when the assessment was made u/s 143(3) of the Act the contention of the assessee that the AO has initiated re-assessment proceedings on the basis of the same facts which has been considered in the original assessment proceedings is accepted - there is no new facts which has come to the knowledge of AO for initiation of re-assessment proceedings also re-assessment proceedings has been initiated after expiry of more than four years as is evident from the notice issued u/s 148 dated 28.3.2011 which is after expiry of four years from the end of the relevant assessment year thus the order of the CIT(A) is upheld that the action of AO was not justified Decided against Revenue.
Issues:
1. Validity of reopening assessment u/s 147 of the IT Act for AY 2004-05. 2. Justification of reassessment based on taxability of capital gain on sale of depreciable assets. 3. Compliance with CBDT instruction No.9/2006 in reopening assessment. Issue 1: Validity of reopening assessment u/s 147 of the IT Act for AY 2004-05: The department filed an appeal against the order of the ld. CIT(A) for assessment year 2004-05, questioning the annulment of the reopening of assessment u/s 147 of the Act. The department argued that the assessee's claim of setting off long term capital loss of AY 2002-03 against short term capital gain on sale of depreciable assets of AY 2004-05 was not allowable under the IT Act. The Tribunal observed that the reassessment proceedings were initiated after more than four years from the relevant assessment year, without any new facts coming to light. The Tribunal agreed with the ld. CIT(A) that the AO's action was not justified, leading to the annulment of the assessment. Issue 2: Justification of reassessment based on taxability of capital gain on sale of depreciable assets: The AO initiated re-assessment proceedings for AY 2004-05, citing that the assessee had set off long term capital loss of AY 2002-03 against short term capital gain of AY 2004-05, resulting in an understatement of income. The AO believed that the income chargeable to tax had escaped assessment. However, the ld. CIT(A) annulled the assessment, stating that the reasons provided by the AO were not justified, especially in light of previous decisions by the Hon'ble Jurisdictional High Court and the Hon'ble Apex Court. The reassessment was deemed unjustified as it was based on facts already considered during the original assessment proceedings. Issue 3: Compliance with CBDT instruction No.9/2006 in reopening assessment: The department contended that the reopening of assessment was done in accordance with CBDT instruction No.9/2006 for taking remedial action. However, the Tribunal found that the reassessment proceedings were initiated beyond the permissible time limit of four years from the end of the relevant assessment year. The reassessment was deemed unwarranted as no new facts had emerged, and the action of the AO was not justified. Consequently, the order of the ld. CIT(A) annulling the assessment was upheld, and the appeal of the department was dismissed. This detailed analysis of the judgment highlights the key issues surrounding the validity of the reassessment proceedings and the justification provided by the department for reopening the assessment, ultimately leading to the dismissal of the appeal.
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