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2021 (3) TMI 827 - AT - Income TaxReopening of assessment - mismatch of TDS Certificate and income declared by the assessee - Reopening on the basis of audit objection - HELD THAT - Hon ble Gujarat High Court in the matter of Vodafone West Ltd. vs. ACIT 2015 (5) TMI 216 - GUJARAT HIGH COURT has held that reassessment proceeding cannot be initiated merely on basis of audit objection, where Assessing Officer has no subjective satisfaction. As it can be seen after going through the impugned order that Ld. A.O. made reassessment on the basis of audit objection. We are of the considered opinion that Ld. A.O. should have formed independent opinion and copy of the said opinion should have been given to the assessee. As we can see that exercise was not carried out by the Ld. Assessing Officer and merely on the basis of audit objection by the Departmental Officer in reassessment proceedings addition were made and same is not tenable in the eyes of law. We hold that proceeding u/s. 147/148 are invalid therefore assessee deserve to get relief on this technical ground, we do not want to go into the merit of the case. Thus, respectfully following above said judgments, we allow appeal of the assessee.
Issues:
1. Validity of assessment order under section 143(3) r.w.s. 147 of the Income Tax Act, 1961. 2. Addition to income based on TDS deductions. 3. Charging of interest under section 234A, 234B, 234C of the Act. 4. Initiation of penalty proceedings u/s. 271(1)(c). Analysis: Issue 1: Validity of assessment order under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 The appellant challenged the assessment order, contending that the notice under section 148 was issued without providing the reasons recorded, which is against the law laid down by the Supreme Court in the case of GKN Drive Shafts India Limited v. ITO. The appellant argued that the assessment made under section 143(3) r.w.s. 147 was contrary to legal principles. However, the lower authorities upheld the assessment, citing internal audit objections as the basis for reopening the case. The appellant's submissions were not adequately considered, leading to a mechanical confirmation of the order without proper appreciation of facts and law. The Tribunal noted a mismatch between the TDS Certificate and the income declared by the assessee, emphasizing the importance of providing reasons recorded to the appellant for a valid assessment. Issue 2: Addition to income based on TDS deductions The dispute arose from the addition of ?1,29,01,651 to the income of the assessee based on TDS deductions by various parties. The appellant submitted a Revised TDS certificate, which was not considered by the lower authorities. The Tribunal observed that the addition was made solely on the basis of TDS deductions without proper verification of the revised certificate submitted by the appellant. This lack of consideration for the revised documentation led to an erroneous addition to the income, highlighting the need for a thorough review of all relevant evidence before making such adjustments. Issue 3: Charging of interest under section 234A, 234B, 234C of the Act The appellant contended that the lower authorities erred in not directing the Assessing Officer to refrain from charging interest under section 234A, 234B, 234C of the Act. However, the Tribunal did not delve into this issue in detail in its judgment, focusing primarily on the procedural irregularities in the assessment process. Issue 4: Initiation of penalty proceedings u/s. 271(1)(c) Similarly, the appellant raised concerns regarding the initiation of penalty proceedings under section 271(1)(c), alleging that the lower authorities failed to provide proper justification for such actions. However, the Tribunal did not address this issue explicitly in its decision, as the primary focus was on the procedural flaws in the assessment process and the lack of independent opinion formation by the Assessing Officer. In conclusion, the Tribunal allowed the appeal of the assessee, declaring the proceedings under section 147/148 as invalid due to the failure of the Assessing Officer to form an independent opinion and provide the appellant with the reasons recorded. The judgment emphasized the need for a valid and well-founded assessment process, as highlighted in various legal precedents cited during the case analysis.
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