2021 (4) TMI 42 - AT - Income Tax

Reopening of assessment u/s 147 - not making any assessment u/s. 143 of the Act for the AY 2006-07 - making protective addition - HELD THAT - We find in this clinching factual backdrop that the tribunal's co-ordinate bench's order in assessee's case itself for AY. 2007-08 2020 (5) TMI 675 - ITAT HYDERABAD holds that such a re-opening making protective addition is not sustainable as per case law DHLF Venture Capital Fund 2013 (6) TMI 575 - BOMBAY HIGH COURT . We adopt the very reasoning herein mutatis mutandis to quash the impugned reopening. All other pleadings on merits are rendered infructuous. - Decided in favour of assessee.

Summary

Issues Involved:
Appeal against CIT(A)'s order for AY 2006-07 under Income Tax Act, 1961 involving substantive grounds.

Analysis:

1. Grounds Raised by Assessee:
The assessee raised various substantive grounds challenging the CIT(A)'s order. These grounds included contentions regarding the erroneous nature of the CIT(A)'s decision, the legality of reopening the case under section 147 without prior assessment under section 143, and the addition made by the Assessing Officer without proper consideration of facts. The appellant also argued about the work being done on a contract basis, the explanation for manual work carried out, and the reliance on a third-party sworn statement. Additionally, there were objections raised regarding the calculation of cost of acquisition for computing Capital Gain and the passing of penalty under section 271(1)(c) of the Act.

2. Assessment and Tribunal's Decision:
The Assessing Officer had reopened the assessment under Section 147, culminating in an assessment/reassessment making a protective addition. However, the tribunal referred to a similar case law and held that such reopening with protective additions is not sustainable. Citing the case law DHLF Venture Capital Fund Vs. ITO, the tribunal quashed the impugned reopening. As a result, all other arguments and pleadings on merits became irrelevant. Consequently, the assessee's appeal was allowed based on this reasoning.

3. Conclusion:
The tribunal's decision was based on the unsustainability of the reopening of the assessment with protective additions, in line with established case law. By quashing the reopening, the tribunal rendered all other substantive grounds raised by the assessee infructuous. Therefore, the appeal was allowed in favor of the assessee, with the order pronounced in open court on 15th March 2021.

This detailed analysis covers the grounds raised by the assessee, the assessment process, and the tribunal's decision, providing a comprehensive understanding of the judgment.