2020 (2) TMI 518 - HC - Income Tax

Validity of Appeal - alternate remedy - reopening of assessment - regular Appellate remedy available to the Assessee against the impugned Reassessment Order - HELD THAT - Single Judge ought to have upheld the objection of the Revenue and relegated the Assessee to the regular Appellate remedy available to the Assessee against the impugned Reassessment Order under Section 147/148 of the Act for the Assessment year 2008-09. Assesseealso fairly submitted before us that even at this stage the Assessee may be allowed to avail his remedy by way of appeal before the First Appellate Authority viz. CIT (Appeals) to which the learned Counsel for Revenue Ms.Hema Muralikrishnan also does not have a serious objection. We are inclined to accept the said submission of the learned Counsel for the Assessee and the Revenue accordingly we allow the present appeal of the Revenue and set aside the order passed by the learned Single Judge and we direct that if the Assessee prefers a regular appeal before the learned CIT (Appeals) for the Assessment year 2008-09 against the impugned re-assessment order dated 2 March 2016 for the Assessment year 2008-09 within a period of four weeks from today then without raising any objection with regard to the limitation the learned CIT (Appeals) may entertain the said appeal and decide the same on merits and in accordance with law subject to fulfillment of other conditions as may be imposed by it. Appeals of the Assessee may be decided independently uninfluenced by any of the observations made by the learned Single Judge in the order impugned before us.

Issues:
Appeal against order quashing reassessment proceedings for Assessment Year 2008-09 based on disclosure by Assessee; Validity of disclosure and subsequent reassessment; Whether the re-assessment proceedings were based on a change of opinion by the Assessing Authority; Availability of appellate remedy against re-assessment order; Consideration of Assessee's appeal before CIT (Appeals).

Analysis:

Issue 1: Appeal against order quashing reassessment proceedings
The Revenue filed an intra-court appeal challenging the order of the Single Judge allowing the Writ Petition filed by the Assessee against the Assistant Commissioner of Income Tax. The Single Judge quashed the reassessment proceedings for the Assessment Year 2008-09, despite the Revenue's objection that the Assessee had an available remedy by way of appeal against the reassessment order.

Issue 2: Validity of disclosure and reassessment
The Single Judge's reasons for allowing the writ petition highlighted that the Assessee had provided detailed information regarding the sale of the Kovalam property, including the purchase details, use for cultivation, and consideration received. The Single Judge concluded that the Revenue was attempting a second review of the transaction beyond the scope of reassessment under Section 147 of the Act. The Judge cited precedents to support the position that the Revenue's actions were beyond the statutory provisions.

Issue 3: Change of opinion in reassessment proceedings
The Revenue argued that the disclosure made by the Assessee on 9 November 2010 was not actually furnished to the Assessing Authority during the original assessment proceedings. The Revenue contended that the Single Judge erred in relying on this disclosure to conclude that the reassessment was based on a change of opinion, which is impermissible under Section 147/148 of the Act.

Issue 4: Availability of appellate remedy
The Court examined the original assessment record and found discrepancies regarding the filing and acknowledgment of the disclosure letter dated 9 November 2010. The Court noted that the said letter was not present in the assessment record produced by the Revenue, indicating a lack of proper documentation. The Court emphasized the importance of following due process and the availability of the appellate remedy against the reassessment order.

Issue 5: Consideration of Assessee's appeal before CIT (Appeals)
Both the Counsel for the Assessee and the Revenue agreed that the Assessee should be allowed to appeal before the CIT (Appeals) against the impugned reassessment order. The Court accepted this submission, setting aside the Single Judge's order and directing the Assessee to file an appeal within four weeks. The Court emphasized that the appeal should be decided independently without influence from the previous judgment.

In conclusion, the Court allowed the Revenue's appeal, directing the Assessee to pursue the regular appellate remedy available against the reassessment order for the Assessment Year 2008-09 before the CIT (Appeals).

This detailed analysis covers the issues raised in the judgment, including the disclosure by the Assessee, the validity of reassessment proceedings, the change of opinion argument, the availability of appellate remedy, and the direction for the Assessee to appeal before the CIT (Appeals).

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