2015 (4) TMI 550 - HC - Income Tax

Reopening of assessment - Tribunal directing the AO to re-consider the issue of exemption, if any, available to the assessee, under Section 10A - Held that - The order of remit made by the Appellate Tribunal has been rendered also noticing that the matter stands restored on the file of the Commissioner of Income Tax (Appeals) and the appeal has to be disposed of after giving opportunity of hearing to the assessee. The re-opening order having thus been affirmed, all issues as to exemptions, if any, available to the assessee, including in terms of Section 10A of the Income Tax Act, will remain open for adjudication before the Tribunal. The argument on behalf of the appellant that what has led to the impugned reopening order was merely a change of opinion of the Original Assessing Officer as contained in the Original Assessment Order does not stand. If the Assessing Officer, at the first instance, has ignored the very particular binding statutory provision, that by itself, would be sufficient ground on which the assessment order could be re-opened. The plea in that regard therefore fails. Noground arises for decision as a question of law for consideration in this appeal in favour of the assessee. - Decided against assessee.

Summary

Issues:
1. Validity of re-opening of assessment under Section 143(3) of the Income Tax Act.
2. Consideration of exemption under Section 10A of the Income Tax Act.
3. Interpretation of excess relief granted and provisos under Section 10A.

Analysis:

The High Court of Kerala addressed the appeal challenging the order of the Income Tax Appellate Tribunal, which set aside the decision of the Commissioner of Income Tax (Appeals) regarding the re-opening of assessment. The main issue was whether the Tribunal erred in upholding the Assessing Officer's decision to re-open the assessment completed under Section 143(3) of the Income Tax Act and whether the Tribunal was correct in directing a re-consideration of the exemption under Section 10A of the Act for the assessee. The Tribunal highlighted that the only issue for consideration was the legality of the assessment reopening for the assessment year 1998-99.

The Tribunal found that the Assessing Officer had not considered the effect of provisos under Section 10A of the Income Tax Act during the initial assessment, leading to potential excess relief granted to the assessee. Therefore, the Tribunal upheld the re-opening proceedings and overturned the Commissioner of Income Tax (Appeals) decision. The High Court emphasized that the re-opening order was justified, and all issues related to exemptions, including those under Section 10A, needed further examination before the Tribunal.

The appellant argued that the re-opening was based on a mere change of opinion by the Assessing Officer, which was dismissed by the High Court. It was clarified that if the Assessing Officer had overlooked a binding statutory provision in the initial assessment, it was sufficient grounds for re-opening the assessment. Consequently, the plea regarding a change of opinion was rejected.

Ultimately, the High Court concluded that there were no legal grounds favoring the assessee in this appeal. As a result, the appeal was dismissed, affirming the decision of the Tribunal regarding the re-opening of assessment and the need for further examination of exemptions under Section 10A before the Tribunal.