2014 (7) TMI 953 - AT - Income Tax

Reopening of assessment u/s 148 Addition of STCG made Power of review - Held that - The legislature has not conferred power on the AO to review its own order - the power u/s 147 cannot be used to review the order when nothing new had happened and no new material or information has come on record or received by the AO between the date of assessment order sought to be re-opened and the date of formation of opinion - following the decision in CIT v. Kelvinator of India Ltd. 2002 (4) TMI 37 - DELHI High Court thus, the re-opening is bad in law and consequently the re-assessment is quashed Decided in favour of Assessee.

Summary

Issues Involved:
1. Validity of re-opening under section 147/148 of the Income tax Act.
2. Conformation of additions made under section 50C of the Act.

Issue 1: Validity of Re-opening under Section 147/148:

The appeal challenged the re-opening of assessment by the AO under section 147/148 of the Income Tax Act for the assessment year 2003-04. The AO re-opened the assessment based on the sale of a plot of land by the assessee, where the market value determined by the Stamp Valuation Authority was higher than the consideration shown in the Conveyance Deed. The assessee contended that no new material or information emerged post the original assessment under section 143(3), and the re-opening was unjustified. The AO had not conducted any inquiry on the applicability of section 50C during the original assessment. The contention was supported by legal precedents such as CIT vs. Eicher Ltd. and CIT vs. Kelvinator of India Ltd. The Tribunal noted that the AO's failure to apply his mind during the original assessment did not warrant re-opening under section 147/148, as observed in the case law. The Tribunal held that the AO lacked the authority to review his own assessment order and that the re-opening was impermissible without new material or information. The re-assessment was quashed, and the appeal was allowed.

Issue 2: Conformation of Additions under Section 50C:

The second ground raised in the appeal related to the additions made by the AO under section 50C of the Act. The AO had added a sum to short term capital gain based on the valuation by the Stamp Valuation Authority, which was higher than the consideration in the Conveyance Deed. However, since the Tribunal had already quashed the re-assessment on the grounds of validity, this issue became moot and infructuous. Therefore, the Tribunal did not delve into the specifics of the additions made under section 50C due to the quashing of the re-assessment.

In conclusion, the Tribunal allowed the appeal of the assessee, quashing the re-assessment on the grounds of invalid re-opening under section 147/148 of the Income Tax Act. The legal analysis highlighted the importance of new material or information for re-opening assessments, citing relevant case laws to support the decision.