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2015 (10) TMI 236 - AT - Income TaxReopening of assessment - addition on account of foreign travelling expenses of the directors - CIT(A) held that the provisions of section 150 are not applicable in this case and the reassessment is barred by limitation as held BY ITAT in assessee s own case - Held that - We find that a perusal of the order of the Tribunal reveals that the observations made by the Tribunal cannot be treated as direction under section 150(1) of the Act. The Tribunal simply deleted the additions made by the AO in the block assessment holding that such additions cannot be made in the block assessment as there was no incriminating material found during the search action. The mere observation that the decision given by the Tribunal should not be construed as an authority for the proposition that the disallowance of foreign travelling expenses cannot be made at all in regular assessment of income or on the basis of statement recorded by the directors, was a general observation to the effect that the decision given by the Tribunal in respect of block assessment years should not be taken as a precedent in regular assessment proceedings. Neither any direction was given by the Tribunal for assessing the foreign travelling expenses afresh, nor for reopening of any assessment. A perusal of the said explanation 2 to section 153 of the Act reveals that the said explanation is also not applicable to the facts of the present case. The said explanation provides that if any income is excluded from the total income of the assessee for an assessment year by an order, then such income is to be assessed in the relevant assessment year for which it was held to be relatable. This proposition is not applicable to the facts of the present case at all. It is nowhere held by the Tribunal that the income of the assessee is relatable to any other assessment year. Hence, we do not find any infirmity in the order of the ld. CIT(A) holding that the reopening was barred by limitation. Hence the consequential reopened assessments are not sustainable in law. - Decided against Revenue.
Issues Involved:
1. Reopening of assessment barred by limitation under section 150 of the Income Tax Act. 2. Whether the observations made by the Tribunal can be considered as directions under section 150 of the Act. 3. Validity of reopening of assessments for different assessment years based on Tribunal's observations. Issue 1: Reopening of assessment barred by limitation under section 150 of the Income Tax Act: The case involved appeals by the Revenue against the CIT(A)'s order related to assessments for different years. The original assessments were completed, followed by a search action under section 132 and a block assessment under section 158BC. The Revenue reopened assessments for multiple years disallowing foreign travel expenses. The assessee contended that the reopening was barred by limitation and a change of opinion. The CIT(A) held that the reopening was indeed barred by limitation, and the reassessment was bad in law. The Tribunal agreed, emphasizing that the observations made by the Tribunal did not constitute directions under section 150(1) of the Act. The Tribunal found no merit in the Revenue's appeal, dismissing it. Issue 2: Whether the observations made by the Tribunal can be considered as directions under section 150 of the Act: The Tribunal's observations, which led to the reopening of assessments by the Revenue, were analyzed. The CIT(A) highlighted that the Tribunal's observations did not amount to directions under section 150(1) of the Act. The Tribunal concurred, stating that the Tribunal's decision merely deleted the additions made by the AO in the block assessment and did not provide any direction for reassessment. The Tribunal clarified that the Tribunal's observations should not be taken as a precedent for regular assessment proceedings. The provisions of explanation 2 to section 153 were also examined, concluding that they were not applicable to the case. Ultimately, the Tribunal held that the reopening was barred by limitation, and the reopened assessments were not sustainable in law. Issue 3: Validity of reopening of assessments for different assessment years based on Tribunal's observations: The Revenue's appeal against the CIT(A)'s order was based on the contention that the Tribunal's observations should be considered as directions under section 150 of the Act. However, the Tribunal reiterated that the observations did not constitute directions for reassessment. The Tribunal further explained that the Tribunal's decision in the block assessment years should not be seen as a precedent for regular assessment proceedings. The Tribunal also examined the provisions of explanation 2 to section 153 and found them inapplicable to the case. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that the reopening was barred by limitation and not sustainable in law. This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each issue, focusing on the reopening of assessments and the significance of the Tribunal's observations in the context of the Income Tax Act.
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