2015 (2) TMI 856 - HC - Income Tax

Reopening of assessment - un-accounted payment made to the subcontractor - Tribunal set aside reopening notice - Held that - The Tribunal having considered the record, correctly found that when the earlier assessment was made before the AO, one of the query was in respect to the payment made to the subcontractor and the assessee had furnished all details. In this manner, all preliminary informations were already there on record. The Tribunal also found that the possibility of forming an opinion about the expenditure claimed by assessee could not be ruled out at the time when the earlier assessment was made and therefore, thereafter, the AO is not entitled to change the opinion and thereby again reopen the assessment within the period of four years.Issue is already covered by the decision of this Court in the case of Gujarat Power Corporation Ltd. (2012 (9) TMI 69 - Gujarat High Court). - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment under section 147 of the Income Tax Act - Validity of reassessment based on same material as original assessment.

Analysis:
The Revenue appealed against the quashing of reassessment for the assessment year 2004-2005, where the AO disallowed expenses and reassessed the income. The CIT (Appeals) found the reopening of assessment unjustified, leading to the appeal being allowed. The Tribunal observed that the preliminary information regarding subcontractor expenses was already on record during the original assessment. The Tribunal also noted that the reasons recorded for reopening were vague and presumptive, lacking a belief that income had escaped assessment. The Tribunal dismissed the appeal, citing the Gujarat High Court decision in the case of Gujarat Power Corporation Ltd.

The High Court considered whether there was sufficient material for the AO in the original assessment and valid grounds for reopening. Both the CIT (Appeals) and the Tribunal found no justification for reopening the assessment, leading to the quashing of subsequent proceedings. The Court noted that the issue was already covered by the Gujarat High Court decision in Gujarat Power Corporation Ltd. The Court concluded that no substantial question of law arose for consideration in the appeal, rendering the appeal meritless and subsequently dismissed it.