2021 (2) TMI 1112 - HC - Income Tax

Reopening of assessment u/s 147 - Whether the first re assessment order made u/s 143(3) r.w.s. 147 of the Act dated 17.02.2014 gets effaced when a subsequent re-assessment order was made u/s 143(3) r.w.s. 147 of the Act, on 22.03.2016, in respect of the same Assessment Year and on same facts? - HELD THAT - It is well settled in law that when a subsequent order is passed in respect of the same assessment, the previous order of assessment passed by the Assessing Officer gets effaced. In the instant case, in view of the order dated 22.03.2016, the previous order of assessment passed by the Assessing Officer dated 17.02.2014 got effaced and therefore, the subsequent order passed by the Assessing Officer dated 22.03.2016 prevails. Therefore, the first substantial question of law is answered in favour of the assessee and against the revenue. We are informed that against the subsequent order of assessment, the appeal is pending before the Commissioner of Income Tax (Appeals). Therefore, in the facts of the case, it is not necessary for us to answer the remaining substantial questions of law and the appeal is disposed of with liberty to the parties to raise all legal contentions as are admissible to them in law in the appeal, which is pending adjudication before the Commissioner of Income Tax (Appeals).

Summary

Issues:
1. Validity of subsequent re-assessment order in relation to the first re-assessment order.
2. Justification of re-opening assessment under section 147 without argued issues.
3. Validity of re-assessment proceedings under section 148 and applicability of section 153C of the Act.

Analysis:

Issue 1:
The appeal was filed against the order of the Income Tax Appellate Tribunal regarding the Assessment Year 2008-09. The appellant argued that the subsequent re-assessment order passed on 22.03.2016 should prevail over the first re-assessment order dated 17.02.2014. The court referred to the legal principle that when a subsequent order is passed concerning the same assessment, the previous order gets effaced. In this case, the order dated 22.03.2016 prevailed over the earlier order, leading to a decision in favor of the assessee against the revenue.

Issue 2:
The tribunal's decision to uphold the re-opening of assessment under section 147 was questioned as the issue was not argued by either party. The court noted that recorded reasons for re-opening did not constitute reasons to believe. However, since the subsequent order prevailed over the previous one, the court did not delve into this issue further, as the appeal against the subsequent order was pending before the Commissioner of Income Tax (Appeals).

Issue 3:
The tribunal held that the re-assessment proceedings initiated under section 148 were valid and that section 153C of the Act was not applicable. The Assessing Officer had provided the appellant with seized material, leading to a decision that was deemed perverse by the appellant. As the subsequent order prevailed and the appeal against it was pending, the court did not address this issue in detail, disposing of the appeal with liberty for the parties to raise legal contentions in the pending appeal before the Commissioner of Income Tax (Appeals).

In conclusion, the High Court of Karnataka ruled in favor of the assessee concerning the validity of the subsequent re-assessment order over the previous one. The court refrained from addressing the other substantial legal questions due to the pending appeal against the subsequent order before the Commissioner of Income Tax (Appeals).