2010 (4) TMI 1217 - AT - Income Tax

Summary

Issues involved: Jurisdiction u/s 147 for reopening assessment, validity of reassessment proceedings, sufficiency of reasons for reopening assessment, suppressed production, correctness of production calculation.

Jurisdiction u/s 147 for reopening assessment:
The Revenue appealed against the decision of the Ld. CIT(A) challenging the assumption of jurisdiction by the A.O. u/s 147, contending that it was correctly reopened in accordance with the Income-tax Act. The original assessment was completed u/s 143(3) of the Act, followed by a search and block assessment. The A.O. reopened the assessment based on information from the Kerala State Excise Technical Manual, suspecting suppression of production and sales outside the books. The Ld. CIT(A) held that the reassessment proceedings were not validly initiated as there was no evidence to show that income had escaped assessment. The Revenue argued that the sufficiency of reasons could not be questioned and the A.O.'s action was lawful. However, the Tribunal held that the A.O.'s action was merely based on suspicion and not valid reasons, thus upholding the Ld. CIT(A)'s decision to quash the assessment proceedings.

Suppressed production and correctness of production calculation:
The Revenue also challenged the Ld. CIT(A)'s decision on the merits of suppressed production. After considering submissions from both parties and reviewing the assessment order, the Tribunal found no evidence of suppressed production as per the manufacturing process explained. The A.O.'s calculation of production based on the Kerala State Excise Manual was also deemed incorrect. Consequently, the Tribunal dismissed the Revenue's appeal on this ground as well.

In conclusion, the Appellate Tribunal ITAT INDORE upheld the decision of the Ld. CIT(A) to quash the reassessment proceedings initiated u/s 147 for lack of valid reasons and dismissed the Revenue's appeal regarding suppressed production and incorrect production calculation.