2016 (3) TMI 1390 - AT - Income Tax

Reopening of assessment u/s 147 - tax liability u/s 115JB is more than the normal provision of the Act and further, assessee is not liable for deduction of rebate under section 88E while determining the tax liability under section 115JB - HELD THAT - It is an admitted position that, there is neither any failure on the part of the assessee either to furnish the return of income under section 139(1) nor any failure to disclose fully and truly all material facts necessary for the assessment which is evident from the bare perusal of the reasons recorded and even from the assessment order. The assessee has duly shown the tax liability under the normal provisions and also as per under section 115JB. AO while computing the income in the original assessment under section 143(3) has taken note of this fact. So now, the AO cannot hold that such a tax liability computed by the AO is erroneous or there is any failure on the part of the assessee to disclose fully and truly all material facts. Conclusion of the CIT(A) for holding that, reopening of the assessment is bad in law is thus affirmed. Accordingly, we also direct that such an action initiated under section 148 should be quashed. CIT(A) has decided this issue in favour of the assessee after following the decision of Horizon Capital Ltd 2011 (10) TMI 489 - KARNATAKA HIGH COURT wherein it has been held that, the assessee is entitled to rebate under section 88E of the Act in respect of STT paid where the income is assessed under section 115JB. Without there being any contrary decision brought to our notice, we do not find any reason to deviate from such a finding of the CIT(A). Accordingly, the grounds raised by the revenue stands dismissed.

Summary

Issues Involved:
1. Validity of reopening assessment under section 147
2. Allowance of rebate under section 88E in computation of tax liability under section 115JB

Analysis:

Issue 1: Validity of reopening assessment under section 147
The appeal was filed by the revenue against the order passed by Ld. CIT(A)-8 Mumbai for the assessment year 2007-08. The AO sought to reopen the assessment under section 147, claiming that the assessee had not paid the correct tax amount under section 115JB. The AO argued that no rebate should be allowed while computing tax liability under section 115JB. However, the CIT(A) held that the reopening was unjustified as all material facts were disclosed during the original assessment under section 143(3). The CIT(A) relied on the Proviso to section 147, stating that unless there is a failure on the part of the assessee to disclose material facts, reopening after 4 years is not permissible. The Tribunal agreed with the CIT(A) that there was no failure on the part of the assessee, and the AO's attempt to reopen the assessment was in violation of the statutory limitation.

Issue 2: Allowance of rebate under section 88E in computation of tax liability under section 115JB
The AO contended that no rebate should be allowed under section 88E while calculating tax liability under section 115JB. However, the CIT(A) ruled in favor of the assessee, citing a decision of the Hon’ble Karnataka High Court. The Tribunal upheld the CIT(A)'s decision, stating that in the absence of any contrary decision, the assessee was entitled to the rebate under section 88E even when the income was assessed under section 115JB. Consequently, the grounds raised by the revenue were dismissed, and the appeal of the revenue was ultimately dismissed.

In conclusion, the Tribunal found that the reopening of the assessment was unjustified as all material facts were disclosed during the original assessment, and the assessee was entitled to the rebate under section 88E in the computation of tax liability under section 115JB.