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2020 (8) TMI 726 - HC - Income TaxValidity of reopening of assessment u/s 147 - whether mere audit objection could not form basis to reopen the completed assessment? - CIT(A) dismissed the assessee's appeal insofar as the reopening of assessment is concerned, and on the merits, the CIT(A) held that the assessee has not raised any ground of appeal that is to presume that the assessee has not pressed the ground of addition made by the AO -Tribunal remanded the matter to CIT(A) to adjudicate the issue on merits - HELD THAT - Tribunal ought to have adjudicated all the grounds raised by the assessee that is whether the reopening is valid in law and whether there were materials in the hands of the Assessing Officer for reopening the assessment. So the assessee is right in contending that the audit objection cannot be the basis for reopening. The Assessing Officer has not recorded any reasons as to why he came to the conclusion that the income chargeable to income tax has escaped assessment and what was the belief which led to issuance of notice under Section 148 of the Act. Factually, whether the assessee had produced the books of accounts and such other material as we find that the Tribunal did not consider these issues. We deem it appropriate to set aside the order passed by the Tribunal and remand the matter back to the Tribunal for fresh consideration.
Issues: Validity of reassessment under Section 147, Jurisdiction under Section 147, Non-disposal of objections against reassessment, Addition under Section 69, Notice under Section 147 during pending Section 154 proceeding.
Validity of reassessment under Section 147: The appellant challenged the reassessment under Section 147, arguing it was based on a change of opinion without fresh tangible material. The Tribunal remitted the matter to the Commissioner for considering merits only, neglecting the validity of jurisdiction under Section 147. The High Court found the Tribunal should have adjudicated on the grounds raised by the assessee regarding the validity of the reopening and the existence of materials for reassessment. It was noted that audit objections alone cannot justify reopening, and the Assessing Officer failed to provide reasons for concluding that income had escaped assessment. Jurisdiction under Section 147: The appellant contended that the reassessment was invalid due to non-disposal of objections against reassessment before passing the assessment order. The High Court observed that the Tribunal did not consider whether the assessee had produced books of accounts and other relevant materials. Consequently, the High Court set aside the Tribunal's order and remanded the matter for fresh consideration, emphasizing the need to address all raised issues, including the validity of reopening. Non-disposal of objections against reassessment: The appellant argued that the reassessment was void as objections raised were not addressed, citing guidelines from previous court decisions. The CIT(A) dismissed the appeal regarding the reopening of assessment and confirmed the addition made by the Assessing Officer. The Tribunal remanded the matter to the CIT(A) for adjudication on merits, prompting the High Court to allow the appeal and restore it to the Tribunal for a fresh hearing in line with the law. Addition under Section 69: The Tribunal directed the CIT(A) to adjudicate on the addition made under Section 69, despite the appellant challenging the validity of reassessment under Section 147. The High Court found that the Tribunal should have considered all grounds raised by the assessee, including the validity of the reopening, and remanded the matter for a comprehensive review. Notice under Section 147 during pending Section 154 proceeding: The appellant argued that issuing a notice under Section 147 and conducting reassessment while a proceeding under Section 154 was pending for the same assessment was not justified. The High Court, after setting aside the Tribunal's order, allowed the appeal and restored it for a fresh hearing, enabling the assessee to present all contentions before the Tribunal for a decision on merits. The substantial questions of law were left open due to the remand order, with no costs awarded.
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