2018 (12) TMI 1496 - AT - Income Tax

Reopening of assessment u/s 147 - issue a notice once again when the first reassessment proceeding was pending - Held that - In this case, the Assessing Officer passed reassessment order on 31.03.2013 and again issued notice on the very same day. No fresh material came to the possession of the Assessing Officer on the day on which the first reassessment order was passed. As held in TANMAC India v. DCIT (2017 (1) TMI 122 - MADRAS HIGH COURT) Section 147 is not for extending time limit for completing assessment. This Tribunal is of the considered opinion that reopening of assessment for second time on the day on which the first reassessment was completed on 31.03.2015 is bad in law. Even if there was escapement of income, this Tribunal is of the considered opinion that the AO ought to have brought to taxation on the basis of notice issued on 03.10.2013 under Section 148. Therefore, reopening of assessment by issuing another notice on 31.03.2015 is not justified. - Decided in favour of assessee.

Summary

Issues involved:
Reopening of assessment under Section 147 of the Income-tax Act, 1961.

Analysis:
The judgment pertains to two appeals against the orders of the Commissioner of Income Tax (Appeals) for assessment years 2010-11 and 2011-12. The primary issue considered is the reopening of assessment under Section 147 of the Income-tax Act, 1961. The first round of litigation involved the Assessing Officer reopening the assessment by issuing a notice under Section 148 on 03.10.2013, leading to a reassessment completed on 31.03.2015. However, on the same day, the Assessing Officer reopened the assessment for the second time without fresh material, which the assessee contended as invalid.

The Departmental Representative argued that there was no legal bar to reopen the assessment for the second time when income chargeable to tax had escaped assessment. The second reassessment notice was issued on 31.03.2015 with the approval of the Joint Commissioner of Income Tax. However, the proposal for the second reassessment sent to the JCIT was not available on record, raising questions about the validity of the second reopening.

The Tribunal analyzed the submissions and relevant material. It questioned the necessity for a second notice under Section 148 when the first reassessment was pending, emphasizing that the Assessing Officer could have taxed all escaped income during the initial reassessment. The Tribunal referenced a High Court decision to assert that Section 147 is not meant to extend time limits for assessments. Consequently, it deemed the second reopening on the same day as the first reassessment completion as legally flawed, stating that the Assessing Officer should have addressed any income escapement based on the initial notice from 03.10.2013.

The Tribunal concluded that the authorities' orders were not justifiable, setting them aside and quashing the consequential order by the Assessing Officer. As a result, both appeals by the assessee were allowed. The judgment was pronounced on 12th November 2018 in Chennai.