2015 (10) TMI 1374 - AT - Income Tax

Validity of reopening of assessment - Held that - A plain look at the reasons recorded for reopening the assessment also prima facie shows the casual manner in which the exercise has been carried out simply on the basis of inputs received from the investigation inasmuch as the aggregate of eight entries, which is shown as closing balance, is again added to the entries and, as against total entries of ₹ 37,80,000, the income escaping the assessment is taken at double that amount i.e. ₹ 75,60,000. However, we refrain from making any further observations on this issue and, suffice to say, that learned Commissioner (Appeals) will deal with all issues relating to validity of reopening the assessment, including the issues touched upon above, as the assessee may raise, give a fair and reasonable opportunity of hearing to the assessee and decide the matter in accordance with the law and by way of a speaking order and to dispose of the matter within six months from the date of receipt of this order - Decided in favour of assessee for statistical purposes

Summary

Issues:
Validity of reassessment order under section 147 of the Income Tax Act, 1961 for the assessment year 2001-02.

Analysis:
1. The appeal was initially disposed of ex parte in favor of the assessee but was later recalled at the request of the assessee for a hearing on merits. The appeal challenges the order dated 2nd November 2011 by the CIT(A) regarding assessment under section 144 r.w.s. 147 of the Income Tax Act, 1961 for the assessment year 2001-02.

2. The primary issue addressed is the validity of the reassessment order. The contention raised by the assessee is that since no additions were made concerning the grounds for reopening the assessment, the reassessment itself should be quashed. The reasons for initiating proceedings under section 147 were based on transactions by Aayushi Stock Brokers Pvt Ltd, which the assessee allegedly failed to explain.

3. The legal position states that when no additions are made regarding the income identified in the reasons for reopening the assessment, no further additions can be made. The reassessment proceedings are meant for the specific income identified in the reasons recorded. If no additions are made based on those reasons, the reassessment is legally unsustainable. The Bombay High Court clarified this stance in CIT v. Jet Airways (I) Ltd., emphasizing the need for a fresh notice under section 148 if the Assessing Officer intends to assess different income.

4. In this case, although no additions were made in connection with the reasons for reopening the assessment, the Assessing Officer included several other additions to the income. The Tribunal remitted the verification of this aspect to the Commissioner (Appeals) for further examination. The Tribunal also highlighted the need for a thorough review of the validity of the reassessment, considering the casual manner in which it was conducted based on investigation inputs.

5. The Tribunal directed the Commissioner (Appeals) to address all issues related to the validity of reopening the assessment, provide a fair hearing to the assessee, and deliver a speaking order within six months from the date of the Tribunal's order. Since the validity of the assessment proceedings was restored to the Commissioner (Appeals), further discussion on other issues in the appeal was deemed unnecessary.

6. Consequently, the appeal was allowed for statistical purposes, and the Tribunal emphasized the importance of resolving the matter promptly to avoid prolonged uncertainty for the appellants. The judgment was pronounced on 6th June 2014.