2018 (9) TMI 65 - AT - Income Tax

Reopening of assessment - Deemed dividend under Section 2(22)(e) - Exemption under Section 10B - Held that - Revenue filed appeal before this Tribunal in respect of deemed dividend under Section 2(22)(e) of the Act alone. As far as exemption under Section 10B of the Act is concerned the Revenue accepted the order of the CIT(Appeals) and no appeal was filed before this Tribunal. Therefore as rightly submitted by the Ld. representative for the assessee the order of the CIT(Appeals) in respect of exemption under Section 10B of the Act attained finality. The order of the Assessing Officer merged with the order of the CIT(Appeals) therefore this Tribunal is of the considered opinion that the Assessing Officer cannot overturn the order of the CIT(Appeals) by reopening the assessment on the ground that the assessee has not filed return of income within the time limit. This Tribunal is of the considered opinion that the finality attained in a judicial order or in the order of executive officer by whom the order was passed in a judicial proceeding cannot be so lightly disturbed by the subordinate officers. If the Assessing Officer is allowed to reopen the assessment after the order of the CIT(Appeals) then the tax payers may not have confidence on the judicial system of this country. The power to determine or adjudicate an issue even though technically flows from Income-tax Act 1961 actually flows from confidence reposed by the people in the system. In this case an appeal was filed before this Tribunal against the very same order of the CIT(Appeals). But the Assessing Officer accepted the decision of the CIT(Appeals) in respect of the claim of exemption under Section 10B of the Act. Therefore this Tribunal is of the considered opinion that reopening of assessment by the Assessing Officer by issuing notice under Section 148 would amount to overturning or disturbing the order of the CIT(Appeals) which attained finality. - decided in favour of assessee

Summary

Issues:
1. Disallowance of claim for exemption under Section 10B of the Income-tax Act, 1961.
2. Assessment of deemed dividend under Section 2(22)(e) of the Act.
3. Reopening of assessment by the Assessing Officer based on the ground of limitation for filing the return of income.

Analysis:
1. The appellant's appeal was against the Commissioner of Income Tax (Appeals) order regarding the disallowance of the claim for exemption under Section 10B of the Act. The Assessing Officer had disallowed the claim initially, but the CIT(Appeals) allowed it as the sale proceeds were brought to India in convertible foreign exchange within the specified period. The CIT(Appeals) directed the Assessing Officer to grant exemption under Section 10B. The Tribunal confirmed this decision, and the issue attained finality with the order of the CIT(Appeals).

2. The issue of deemed dividend under Section 2(22)(e) of the Act was also raised. The Revenue filed an appeal before the Tribunal on this specific issue alone. The Tribunal upheld the order of the CIT(Appeals) and dismissed the Revenue's appeal. The CIT(Appeals) order on this matter also attained finality as no further appeal was made.

3. The Assessing Officer issued a notice under Section 148 to reopen the assessment, citing that the return was not filed within the limitation period. The Department argued that since the issue of limitation was not considered earlier, the assessment could be reopened. However, the Tribunal emphasized that once an issue has attained finality through a judicial order, subordinate officers should not disturb it lightly. The Tribunal held that reopening the assessment in this case would amount to overturning the order of the CIT(Appeals), which is not permissible. The Tribunal set aside the orders of the lower authorities and quashed the consequential order of the Assessing Officer, ultimately allowing the appeal filed by the assessee.

In conclusion, the judgment highlighted the importance of upholding finality in judicial orders and ensuring that the confidence of taxpayers in the judicial system is maintained by respecting decisions made by higher forums. The Tribunal emphasized that the Assessing Officer should follow the orders of the CIT(Appeals) and higher authorities, and if there are disagreements, the appropriate recourse is to appeal to a higher forum rather than unilaterally reopening assessments.