2020 (10) TMI 873 - AT - Income Tax

Reopening of assessment u/s 147 - case is reopened on the basis of information contained in audit objection - 'change of opinion' or 'fresh information' brought to the knowledge of AO - HELD THAT - If there is an application of mind, it should be apparent from the material placed before the Tribunal. The VAT returns and details of purchases were available before the Assessing Officer at the time of original assessment proceedings under section 143(3) of the Act and no new material had come to the knowledge of the Assessing Officer to take recourse of the reassessment proceedings. Hence, it is merely a change of opinion and CIT (Appeals) has considered the issue in a right perspective. Even otherwise, as canvassed by AR that the tax effect is below the prescribed limit fixed by the CBDT and the Department should have not have filed appeal on this count. Thus confirm the order of the learned Commissioner of Income-tax (Appeals) that proceedings under section 147 of the Act are null and void and the addition is not sustainable. - Decided in favour of assessee.

Summary

Issues:
Appeal by Revenue and cross-objection by assessee against Commissioner's order for AY 2009-10.

Analysis:
1. Grounds of Appeal by Revenue:
- Revenue challenged CIT(A)'s decision on section 147 action, arguing it wasn't a change of opinion but fresh information from audit objection.
- Cited judicial precedents supporting reopening based on audit objections.
- Contested CIT(A)'s view on lack of new information for AO to believe income escaped assessment.

2. Tax Effect Argument:
- Assessee claimed appeal should be dismissed due to low tax effect below CBDT limit.
- Department argued reopening based on audit objection doesn't qualify for dismissal based on tax effect.

3. Reopening Basis and Legal Arguments:
- Assessee argued reopening on audit objection is illegal, citing relevant case law.
- Supported CIT(A)'s decision, stating no new information for reassessment under section 147.
- Referenced Supreme Court ruling on audit party's opinion not constituting valid information for reopening assessment.

4. Judgment and Conclusion:
- Tribunal found assessment reopened on suppression of purchases, not audit objection.
- Tribunal upheld CIT(A)'s decision, stating no new material for reassessment, deeming it a change of opinion.
- Confirmed CIT(A)'s nullification of section 147 proceedings and unsustainable addition of &8377;4,99,975.
- Dismissed Revenue's appeal and assessee's cross-objection as the latter became infructuous.

This detailed analysis covers the grounds of appeal, legal arguments, tax effect consideration, and the Tribunal's final judgment, providing a comprehensive overview of the legal issues addressed in the case.