2022 (2) TMI 1278 - AT - Income Tax

Reopening of assessment based on revenue audit objection - HELD THAT - Reasons recorded never disclosed that reopening based on audit objection. Assessee submits that even the assessee has good case on merit and without going into controversy whether case is covered by exception clause of CBDT Circular or not he is ready to contest the appeal on merit and he has no objection if the order 15.04.2021 is re-called and the appeal is heard on merit. Considering the concessions on the assessee that he is ready to argue the appeal on merit, the order dated 15.04.2021 is recalled and the appeal is fixed for hearing on merit on 31.03.2022. Issuance of separate notice is dispensed with as the date of hearing was fixed with the consent of both the parties. Miscellaneous Application filed by the Revenue is allowed.

Summary

Issues:
1. Rectification of order based on monetary limit of tax effect.
2. Validity of reopening assessment based on revenue audit objection.
3. Reconsideration of appeal on merit.

Analysis:
1. The Miscellaneous Application (MA) was filed by the Revenue seeking rectification of the order dated 15.04.2021 passed in ITA No.27/SRT/2017. The appeal was dismissed by the Tribunal due to the tax effect being less than 50 lakhs as fixed by CBDT in Circular No.17 of 2019. However, the Revenue had the opportunity to revive the appeal if covered by the exception clause of CBDT Circular dated 20.08.2018. The tax effect in the present appeal was Rs.35,25,971, falling under the exception clause of CBDT Circular No.3/2018 as the reopening of assessment was based on a revenue audit objection.

2. The Authorized Representative for the assessee argued that reopening the assessment based on an audit objection was invalid, citing decisions by the Jurisdictional High Court. However, the reasons recorded did not disclose the reopening was based on the audit objection. Despite the controversy over whether the case was covered by the exception clause of the CBDT Circular, the Authorized Representative was willing to contest the appeal on merit. Consequently, the order dated 15.04.2021 was recalled, and the appeal was scheduled for a hearing on merit on 31.03.2022, with both parties consenting to the date without the need for a separate notice.

3. Considering the readiness of the Authorized Representative for the assessee to argue the appeal on merit, the Tribunal allowed the Miscellaneous Application filed by the Revenue, recalling the previous order and fixing the appeal for a hearing on merit. The order was pronounced on 15 February 2022, and the result was placed on the notice board.