2017 (11) TMI 1913 - AT - Income Tax

Reopening of assessment u/s 147 - new tangible material found or not? - HELD THAT - It is not in dispute that at the time of original assessment the AO verified the materials consumed labour charges transportation charges postage and telephone charges and after examining the same made some disallowance on such expenses. AO has changed his mind to reopen the assessment. As observed that in the body of the order u/s.143(3) the Assessing Officer had particularly mentioned that he had examined the details and after examining the details only he had disallowed certain expenses from transportation charges labour charges. In the assessment year 2005-06 in the case of the assessee itself on similar situation the reopening of assessment u/s.147 of the Act was treated as bad in law by this Bench of the Tribunal and following the same the CIT(A) has quashed the reassessment u/s.147. We find that similar issue has been considered in the case of CIT vs. Kelvinator of India Ltd 2002 (4) TMI 37 - DELHI HIGH COURT wherein it has been held that held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceeding without anything further the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong. The decision is approved in the case reported as CIT vs. Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT . AO has initiated reassessment proceedings on the same facts which were available before him at the time of making assessment u/s.143(3) and no new tangible material has come on the basis of which it could be said that he has reason to believe that income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose truly and fully material of facts for the assessment. No reason to interfere with the order of the CIT(A) and accordingly confirm the same and dismiss the grounds of appeal filed by the revenue.

Summary

Issues involved:
Reopening of assessment u/s.147 of the Act based on the same facts as the original assessment.

Analysis:
The appeal before the Appellate Tribunal ITAT, Cuttack involved the reopening of assessment u/s.147 of the Act for the assessment year 2006-07. The primary issue was whether the initiation of proceedings u/s.147 was justified when the Assessing Officer had already examined and disallowed certain expenses during the original assessment u/s.143(3) of the Act. The Assessing Officer reopened the assessment based on discrepancies related to transportation charges, labour charges, hire charges, and depreciation. The revenue contended that the original assessment did not consider the applicability of statutory provisions, justifying the reassessment. However, the CIT(A) found that the reassessment was unjustified as the Assessing Officer had already examined the same details during the original assessment.

The Tribunal noted that the Assessing Officer had changed his mind to reopen the assessment based on the same set of facts, which was deemed impermissible. Referring to a previous case involving the same assessee for the assessment year 2005-06, the Tribunal observed that a similar reassessment was considered bad in law. Citing the decision in CIT vs. Bhanji Lavji, the Tribunal emphasized that reassessment based on a mere relook without new tangible material was not permissible. Additionally, the Tribunal cited the case of CIT vs. Kelvinator of India Ltd, where it was held that initiating reassessment without fresh material amounted to rewarding an authority for its own error.

Ultimately, the Tribunal upheld the CIT(A)'s decision to quash the reassessment u/s.147, as it found no new tangible material to justify reopening the assessment. The Tribunal dismissed the appeal filed by the revenue and confirmed the order of the CIT(A). The cross objection filed by the assessee in support of the CIT(A)'s order was also dismissed as a result.

In conclusion, the Tribunal's judgment centered on the principle that reassessment based on the same facts without new material was impermissible, as established by legal precedents and relevant provisions of the Income Tax Act.