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2019 (8) TMI 1485 - HC - Income TaxReopening of assessment u/s 147 - Deduction u/s 80-I - HELD THAT - As rightly pointed out by the Tribunal, all particulars relating to dividends and short term capital gains and other particulars were available with the AO during the assessment proceedings, which was concluded on 15.02.1999 under Section 143(3) of the Act. Furthermore, the Tribunal, on facts, recorded that the Department did not bring any material fact before it, which was not disclosed in the original return of income. Even in this appeal, no such fact has been brought to our notice nor pleaded in the memorandum of grounds of appeal and presumably that is the reason why the Revenue had raised the substantial questions involving the interpretation of Rule 27 of the Rules and conveniently was not focusing on the issue as to whether the reopening of assessment was on account of change of opinion. A reading of the reassessment order dated 31.03.2004 will clearly reveal that all facts and figures were gathered by the Assessing Officer only from the original return of income filed by the assessee. There was no fresh or tangible material available with the Assessing Officer to reopen the proceedings. Therefore, we have no hesitation to conclude that the reopening of the assessment beyond four years was clearly a case of change of opinion. For all the above reasons, substantial questions of law No.1 to 3 are liable to be answered against the Revenue and consequently, it is held that the reopening of the reassessment is bad in law and is liable to be set aside. Decided against the Revenue.
Issues Involved:
1. Admissibility of the assessee's plea under Rule 27 of the Income Tax Appellate Tribunal Rules. 2. Tribunal's jurisdiction to adjudicate on the validity of reopening of assessment under Section 147 of the Income Tax Act. 3. Entitlement of the respondent to relief on a point decided in favor of the appellant by the lower appellate authority under Rule 27. 4. Validity of the relief granted under Section 80-I of the Income Tax Act. Detailed Analysis: 1. Admissibility of the Assessee's Plea under Rule 27: The Tribunal allowed the assessee to argue the validity of the reassessment under Section 147 of the Income Tax Act despite the CIT(A) not deciding on this issue. The Tribunal referenced Rule 27, which permits a respondent to support the order appealed against on any grounds decided against them, even if they have not filed an appeal or cross-objection. The Tribunal concluded that since the CIT(A) did not adjudicate the reassessment's validity, it was deemed to have been decided against the assessee, allowing them to raise the issue before the Tribunal. 2. Tribunal's Jurisdiction to Adjudicate on Reopening of Assessment: The Tribunal examined whether the reassessment was validly done. It referred to the Supreme Court's decision in the case of Kelvinator of India Ltd., emphasizing that post-01.04.1999, the power to reopen assessments must be based on "tangible material" and not merely a "change of opinion." The Tribunal found that all relevant particulars were available during the original assessment, and no new material facts were presented to justify reopening. Thus, it concluded that the reassessment was a change of opinion and annulled it. 3. Entitlement of the Respondent to Relief under Rule 27: The Tribunal held that under Rule 27, the respondent could support the order on grounds decided against them without filing a cross-objection. The Tribunal found that the CIT(A) did not decide the validity of the reassessment, and hence the assessee was entitled to raise this issue before the Tribunal. The Tribunal's interpretation of Rule 27 was upheld, allowing the assessee to argue the reassessment's validity. 4. Validity of the Relief under Section 80-I: The Tribunal, having annulled the reassessment, did not need to address the merits of the relief under Section 80-I. The Tribunal affirmed the CIT(A)'s order granting relief under Section 80-I, but this was secondary to the primary issue of the reassessment's validity. The High Court noted that since the reassessment was annulled, there was no need to consider the merits of the relief under Section 80-I. Conclusion: The High Court dismissed the Revenue's appeal, set aside the reassessment order dated 31.03.2004, and answered the substantial questions of law Nos.1 to 3 against the Revenue. Consequently, the reopening of the reassessment was deemed invalid. The substantial question of law No.4 was left open as it was not necessary to address it given the conclusions on the first three questions.
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