2018 (5) TMI 149 - HC - Income Tax

Reopening of assessment validity - Held that - The apprehension of the appellant assessee is that the order of the Tribunal in not considering the cross objections filed by the assessee on merits would come in the way of the appellant, in the event revenue prefers an appeal and the matter to be decided on merits of the case. The Tribunal has dismissed the appeal filed by the revenue on merits of the case. The question what was required to be considered by the Tribunal was the claim of the assessee that the reopening of the assessment is not valid and on merit also though several grounds were urged, the same was not adjudicated, cannot be a ground for the assessee to prefer this appeal merely on apprehension. It is true that the revenue s appeal being dismissed, adjudicating on the cross objections filed by the assessee would be only in the academic interest. No substantial question of law.

Summary

Issues:
1. Validity of the order of reassessment under Section 260A of the Income Tax Act, 1961.
2. Non-adjudication of grounds of cross objection by the Tribunal on the legal issue of reopening under Section 147 of the Act.

Analysis:
1. The appellant, a registered society, challenged the order of the Income Tax Appellate Tribunal for the assessment year 2010-11. The appellant collected monies towards society development fund and entrance fees, duly recorded in books. After filing for registration under Section 12AA, the application was rejected, leading to a notice under Section 148 to reopen the case. The Assessing Officer assessed the total income at Rs. 2,53,80,309, differing from the declared income of nil. The appellant appealed to the Commissioner of Income Tax (Appeals) and further to the Income Tax Appellate Tribunal. The Tribunal dismissed the Department's appeal and did not adjudicate on the appellant's cross objection regarding the reopening issue, which was dismissed as academic. The appellant appealed against the non-adjudication of cross objections.

2. The appellant's concern was that the Tribunal's failure to consider the cross objections might impact the case if the revenue appeals. Despite the revenue's appeal being dismissed, the Tribunal's failure to address the appellant's claim on the validity of the reassessment and other grounds raised was noted. The High Court acknowledged that adjudicating on the cross objections, given the revenue's dismissed appeal, would be of academic interest. The Court dismissed the present appeal, stating it does not involve substantial legal questions, but granted the appellant liberty to challenge the order if the revenue appeals against it.

This judgment primarily deals with the validity of reassessment under the Income Tax Act and the Tribunal's non-adjudication of the appellant's cross objections on the reopening issue. The High Court emphasized the need for proper adjudication of all relevant grounds and provided the appellant with the opportunity to challenge the order in case of a revenue appeal.