2017 (1) TMI 1750 - AT - Income Tax

Reopening of assessment u/s 147 - Reopening after expiry of a period of four years from the end of the relevant assessment year - assessee has not filed relevant details - HELD THAT - Assessee admittedly filed the Profit Loss account and other details which are required for completing the assessment. Therefore it cannot be said that there was any negligence on the part of the assessee. Merely because the Assessing Officer could not examine the Profit Loss account filed by the assessee in the course of regular assessment that cannot be a reason to say that the assessee has not filed relevant details. This Tribunal is of the considered opinion that when the assessee provided all the relevant details before the Assessing Officer and the Assessing Officer has also completed assessment under Section 143(3) of the Act it cannot be said that there was any negligence on the part of the assessee. Therefore reopening of assessment beyond the period of four years from the end of the relevant assessment year is outside the scope of Section 147 of the Act. In view of the above this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Appeal filed by the Revenue is dismissed.

Summary

Issues:
1. Reopening of assessment due to deferred revenue expenditure claimed by the assessee.
2. Validity of reopening assessment under Section 147 of the Income-tax Act.
3. Negligence on the part of the assessee in filing relevant details for assessment.

Analysis:

Issue 1: Reopening of assessment due to deferred revenue expenditure
The Revenue appealed against the Commissioner of Income Tax (Appeals) order regarding the assessee's treatment of project development expenditure. The Assessing Officer noticed that the assessee amortized a portion of the expenditure and claimed the balance as deferred revenue expenditure. The Revenue argued that expenses not debited to the Profit & Loss account cannot be allowed while computing total income. Consequently, the assessment was reopened, and the claimed expenditure was disallowed.

Issue 2: Validity of reopening assessment under Section 147
The Tribunal examined the validity of reopening the assessment under Section 147 of the Income-tax Act. The assessment for the relevant year was completed under Section 143(3) of the Act, and the four-year period for reopening had expired before the notice was issued. The Tribunal noted that the assessee had provided all relevant details during the original assessment, and there was no negligence on their part. As the assessment was reopened beyond the statutory period without any fault on the assessee's side, the Tribunal held that the reopening was not valid under Section 147 of the Act.

Issue 3: Negligence in filing relevant details for assessment
Despite the notice issued to the assessee, no one appeared for the hearing. However, the Tribunal found that the assessee had submitted all necessary details during the original assessment. The Tribunal concluded that the failure of the Assessing Officer to examine the Profit & Loss account during the regular assessment did not amount to negligence on the part of the assessee. As a result, the Tribunal confirmed the lower authority's decision and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing that the assessment reopening was invalid due to the absence of negligence on the part of the assessee and the completion of the original assessment within the statutory period. The judgment highlights the importance of following procedural requirements and assessing the validity of reopening assessments under the relevant provisions of the Income-tax Act.