2019 (8) TMI 110 - HC - Income Tax

Reopening of assessment u/s 147 - original assessment u/s 143(3) - HELD THAT - The Tribunal has recorded a finding of fact that there was no good reason for the AO to come to the conclusion that the income had escaped assessment. The finding of fact recorded by the Tribunal is that there was no new tangible material in the hands of the AO at the time of initiating the reassessment proceedings u/s 147 of the Act and at the time of issuing the notice u/s 148. Having regard to the finding of fact recorded by the Appellate Tribunal, we are not inclined to disturb the order. None of the questions as proposed by the Revenue would be termed as substantial question of law involved in this Tax Appeal. - revenue appeal is dismissed

Summary

Issues:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961
2. Addition made under section 143(1) of the Act

Analysis:

Reopening of Assessment under Section 147:
The High Court considered the appeal by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) regarding the reopening of assessment under section 147 of the Income Tax Act. The Tribunal found that the Assessing Officer had not presented any new tangible material to justify the conclusion that income had escaped assessment. The Tribunal highlighted that the reasons recorded for reopening did not provide a valid basis for reassessment. The Court upheld the Tribunal's factual finding, emphasizing the lack of substantial reasons for initiating the reassessment proceedings. Consequently, the Court dismissed the appeal, stating that none of the proposed questions by the Revenue qualified as substantial questions of law in the case.

Addition Made under Section 143(1) of the Act:
The ITAT had also set aside an addition of ?1,92,000 made by the Assessing Officer under section 143(1) of the Act. The Tribunal's decision was based on a detailed examination of the assessment process, highlighting that the initial assessment had already been finalized under section 143(3) of the Act. The Tribunal pointed out the specific disallowance/addition made by the Assessing Officer and the subsequent reasons recorded for reopening the assessment. By scrutinizing the facts and submissions, the Tribunal concluded that the Assessing Officer lacked sufficient grounds to support the addition. The Court, in alignment with the Tribunal's findings, upheld the decision to set aside the addition, further reinforcing the dismissal of the Revenue's appeal.

In conclusion, the High Court's judgment addressed the issues of reopening assessment under section 147 and the addition made under section 143(1) of the Income Tax Act. The Court upheld the ITAT's findings, emphasizing the lack of substantial grounds for reassessment and the insufficiency of reasons provided by the Assessing Officer. The judgment highlighted the importance of tangible material and valid reasons in initiating reassessment proceedings, ultimately leading to the dismissal of the Revenue's appeal.