2016 (6) TMI 703 - HC - Income Tax

Reopening of assessment - report of audit party relied upon - Held that - Identical circumstances, in case of this very assessee for the assessment year 2010-2011 wherein held that the recorded portion of the noting of the Assessing Officer shows as not accepted the point of view of audit party at all. AO in fact, recorded that the objections raised by the Revenue s audit party is not acceptable. However, for some strange reasons, later on proceeded to issue the notice for reopening on the ground that action is getting time barred and that remedial action is being initiated within four years. It is by now well settled for issuing notice for reopening, the Assessing Officer herself ought to have recorded the satisfaction that income chargeable to tax had escaped assessment. Even the revenue s audit party cannot prevail over such opinion of the Assessing Officer. The audit party can bring to the notice of the Assessing Officer an element which might have escaped her notice, nevertheless, once she was convinced that the objection of the revenue party was not valid, her act of issuing notice for reopening was simply not permissible. - Decided in favour of assessee.

Summary

Issues:
1. Validity of notice challenging assessment reopening beyond the prescribed time limit.

Analysis:
The petitioner challenged a notice issued by the Assessing Officer for reopening the assessment for the assessment year 2008-2009, which was issued beyond the four-year period from the end of the relevant assessment year. The High Court noted that in a similar case involving the same assessee for the assessment year 2010-2011, a notice for reopening was struck down. The Court emphasized that for issuing a notice for reopening, the Assessing Officer must independently satisfy that income chargeable to tax had escaped assessment. The Court highlighted that the revenue audit party's objections cannot override the Assessing Officer's opinion. Referring to legal precedent, the Court emphasized that the Assessing Officer's satisfaction is crucial for issuing a reopening notice. In this case, it was found that the Assessing Officer did not accept the objections raised by the audit party, yet proceeded to issue the notice based on other grounds, which was deemed impermissible. Consequently, the High Court quashed the notice dated 27.11.2014, ruling in favor of the petitioner.

Conclusion:
The High Court, comprising Mr. Akil Kureshi and Mr. A.J. Shastri, JJ., allowed the petition and quashed the impugned notice dated 27.11.2014 for reopening the assessment beyond the prescribed time limit. The Court emphasized the necessity for the Assessing Officer's independent satisfaction regarding income escapement for issuing a reopening notice, highlighting that audit objections cannot substitute the Assessing Officer's opinion. Drawing from legal precedent, the Court held that the Assessing Officer's satisfaction is a fundamental requirement. As the Assessing Officer in this case did not accept the audit party's objections but still proceeded to issue the notice, the Court found the notice impermissible and ruled in favor of the petitioner, disposing of the petition.