2015 (6) TMI 28 - AT - Income Tax

Reopening of assessment - Held that - An addition which has already been considered u/s 158BC, the same cannot be made subject matter of addition by again invoking the provisions of Section 148. The reasons recorded by A.O. itself do not point out to the fact that some income had escaped assessment. It has been mentioned in the reasons recorded that the reassessment is being proposed in view of the fact that ITAT had quashed the order u/s 158BC. The reasons recorded are not good enough to initiate proceedings u/s 148 especially in view of the fact that decision regarding addition made u/s 158BC is pending before Hon ble High Court. The provisions of section 147 are meant to tax only that income which had escaped income. The additions made during this year are admittedly part of block assessment when has been taxed by Revenue. If because of inefficiency or otherwise on the part of Revenue, the assessee is able to get some assessment order quashed, the revenue is not empowered to tax the same income by taking another route. - Decided in favour of assesse.

Summary

Issues:
Challenge to validity of assessment made u/s 148 of the Act.

Analysis:
The appeal filed by the assessee contested the validity of the assessment made under section 148 of the Income Tax Act. The main ground of appeal was that the Assessing Officer (A.O.) had proceeded to reassess the income under section 148, which had already been considered in a block assessment. The appellant argued that no notice under section 148 could have been issued again to assess/reassess the income that had already been assessed. The appellant raised various legal issues challenging the assessment, including the legality, jurisdiction, and principles of natural justice of the notice and reassessment order issued by the A.O.

The facts of the case revealed that a notice under section 148 was issued to the assessee for the Assessment Year 1998-99, leading to the addition of a specific amount to the income of the assessee. The A.O. made the addition based on the available material when the assessee did not respond to the show-cause notice. The appeal against this assessment was dismissed by the Ld. CIT(A), prompting the assessee to approach the ITAT. The ITAT directed the Ld. CIT(A) to re-adjudicate the issue on merits, leading to another dismissal of the appeal by the Ld. CIT(A) and subsequent appeal by the assessee before the ITAT.

During the proceedings, the appellant argued that the addition made by the A.O. and confirmed by the Ld. CIT(A) had already been assessed under a block assessment order dated 29.05.2001. The appellant referred to a previous order by the ITAT quashing the block assessment order as time-barred, which was under appeal before the High Court. The appellant contended that the addition confirmed by the Ld. CIT(A) was already subject to assessment under section 158BC, and hence, could not be reassessed under section 148. The appellant highlighted that a similar situation had arisen in the Assessment Year 1999-2000, where the addition was part of a block assessment and the Ld. CIT(A) had quashed the assessment, a decision not appealed by the Revenue.

The ITAT considered the arguments of both parties and examined the material on record. It noted that the income proposed to be reassessed under section 148 had already been assessed under section 158BC in a block assessment. The ITAT observed that the A.O. sought to reassess the income based on the quashing of the previous order by the ITAT and the advice of the standing counsel. Referring to a similar situation in the past, the ITAT agreed with the findings of the Ld. CIT(A) in the Assessment Year 1999-2000 that the income had not escaped assessment and could not be subject to reassessment under section 148. The ITAT held that the provisions of section 147 were meant to tax only the income that had genuinely escaped assessment, and not income already considered in a block assessment.

In conclusion, the ITAT allowed the appeal filed by the assessee, emphasizing that the income in question had already been assessed under section 158BC and could not be subjected to reassessment under section 148. The ITAT held that the reasons recorded by the A.O. for reassessment did not indicate any income had escaped assessment, and the proceedings under section 148 were not justified, especially when the decision on the previous assessment was pending before the High Court. The ITAT ruled that the Revenue could not tax the same income through another route due to inefficiency or other reasons, affirming the findings of the Ld. CIT(A) in the previous assessment year.

The judgment was pronounced in the open court on 31st March 2015.