2023 (6) TMI 1369 - AT - Income Tax

Validity of reopening of assessment - prerequisite for reopening assessment - Non disposal of objections given by appellant against reassessment - HELD THAT - AO has not properly disposed of/ dealt with objections raised by the assessee. We note that the objection as to non-existence of substantive material remained undisposed of. So on this count, the reopening of assessment and the assessment order framed by the AO cannot be sustained. Secondly, we also note that there are several infirmities in the process of obtaining approval from the ld. Joint Commissioner of Income Tax which was obtained dated 16.02.2017 whereas as per the copy of the said sanction placed the approval was dated 03.02.2017 which shows total non-application mind at the end of ld. AO. Considering these infirmities and non-disposal of objections by the AO, we are of the considered view that assessment proceedings as well as reassessment order have been framed in mechanical manner and without application of mind and therefore reopening of assessment cannot be allowed in a casual manner - we are inclined to quash the reopening of assessment as well as the order framed u/s 143(3) r.w.s. 147 - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the issue of challenging the reopening of assessment proceedings and the consequent assessment framed under section 143(3) read with section 147 of the Income Tax Act, 1961.

Details of the judgment:

1. Reopening of assessment proceedings:
The assessee filed the return of income declaring total income, which was processed under section 143(1) of the Act. Subsequently, the assessment was reopened under section 147 of the Act based on the alleged Long Term Capital Gain on the sale of shares. The assessee objected to the reopening on the grounds of lack of tangible material and non-issuance of notice under section 143(2). The Assessing Officer (AO) disposed of the objections without addressing the substantive material aspect. The Appellate Tribunal observed that the reassessment proceedings and the assessment order were marred by infirmities in obtaining approval and non-disposal of objections, indicating a lack of application of mind. Consequently, the Tribunal quashed the reopening of assessment and the assessment order under section 143(3) read with section 147 of the Act.

2. Approval process and non-application of mind:
The Tribunal noted discrepancies in the approval process obtained from the Joint Commissioner of Income Tax, where the approval date mentioned in the sanction did not align with the actual date. This discrepancy highlighted a lack of due diligence and non-application of mind on the part of the Assessing Officer. The Tribunal emphasized that the assessment proceedings and the reassessment order were conducted mechanically, without proper consideration of objections raised by the assessee. Due to these deficiencies, the Tribunal concluded that the reopening of assessment could not be allowed in a casual manner and decided to quash the reassessment order.

3. Decision and conclusion:
In light of the above findings, the Appellate Tribunal allowed the appeal of the assessee, emphasizing the importance of due process and proper application of mind in assessment proceedings. The Tribunal's decision to quash the reopening of assessment and the assessment order was based on the lack of substantive material, non-disposal of objections, and procedural irregularities in obtaining approval. The Tribunal left the merits of the case open for future consideration, should the need arise.

Overall, the judgment underscores the significance of adhering to legal procedures and ensuring a thorough examination of facts before initiating reassessment proceedings under the Income Tax Act, 1961.