2019 (9) TMI 1355 - AT - Income Tax

Reopening of assessment u/s 147 - addition made by AO relates to the GP percentage based addition - HELD THAT - As decided in JET AIRWAYS (I) LTD. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY Income in respect of which notice issued not found to be escaped income Once the AO accepts that the income in respect of which he entertained reason to believe to have escaped assessment, was not in fact escaped income; he has no jurisdiction to reassess other items of income. Considering the above settled nature of the issue and undisputed fact that the AO did not make any addition on account of reasons recorded by him while reopening the assessment, we are of the opinion that the reassessments made by the Assessing Officer are to be quashed as null and void. - Decided in favour of assessee.

Summary

Issues:
1. Condonation of Delay
2. Cross Objections by Assessee
3. Unsustainability of Additions
4. Validity of Reassessment
5. Academic Exercise of Appeals

Condonation of Delay:
The Chartered Accountant representing the assessee filed an affidavit explaining the delay in filing cross objections due to personal reasons, including marriage and subsequent travel. The Tribunal found no mala-fide intent in the delay and decided to condone the delay of 40 days, allowing the case to proceed.

Cross Objections by Assessee:
The assessee raised objections regarding the sustainability of additions made by the Assessing Officer during reassessment. The Tribunal noted that the additions were not based on reasons recorded by the Assessing Officer for reopening the assessment. The legal issue was whether the reassessment was valid, considering the precedent set by the Bombay High Court in a similar case involving Jet Airways. The Tribunal, in line with the court's ruling, deemed the reassessments null and void, leading to the allowance of cross objections by the assessee.

Unsustainability of Additions:
The Assessing Officer had made additions based on GP percentage without reference to the reasons recorded for reassessment. The Tribunal, after considering arguments from both sides and the legal precedent, concluded that the reassessments were invalid and quashed them, allowing the cross objections raised by the assessee.

Validity of Reassessment:
The Tribunal, guided by the judgment of the Bombay High Court, emphasized that if the income for which reassessment was initiated was not found to be escaped income, the Assessing Officer lacked jurisdiction to reassess other items of income. As the Assessing Officer did not make any additions based on the reasons for reopening the assessment, the reassessments were declared null and void.

Academic Exercise of Appeals:
Due to the quashing of reassessments and the allowance of cross objections, the Tribunal deemed the adjudication of the Revenue's appeals as an academic exercise. Consequently, both appeals by the Revenue were dismissed as academic, resulting in the allowance of cross objections by the assessee.

This comprehensive analysis of the judgment highlights the key legal issues addressed by the Appellate Tribunal ITAT Pune, ultimately leading to the dismissal of the Revenue's appeals and the allowance of the cross objections by the assessee.