2021 (4) TMI 987 - AT - Income Tax

Reopening of assessment u/s 147 - original assessment was completed u/s 143 (3) - HELD THAT - We find the AO has issued notice u/s 148 of the Act dated 22.03.2013 for reopening of assessment, whereas the original assessment was completed u/s 143 (3) of the Act determining the total income on 26.08.2008. We observe that the AO has recorded the reasons without intangible information except retreating that the assessee has not disclosed the rental income from the property, but TDS credit is claimed and also higher rebate u/s 88E has been availed. Whereas the Ld. AR submitted that the said information was filed in the original assessment and referred to page 48 to 56 of the paper book. Further, the AO on verifying the facts and the explanations filed has passed the assessment order u/sec143(3) of the Act. Therefore, the reopening of assessment on the same set of facts is only a mere change of opinion and relied on the judicial decisions. We prima facie considering the facts circumstances and the evidences filed are of the view that the notice issued by the A.O. falls beyond the period of time limit. Accordingly, we treat the notice issued as bad in law and quash the assessment u/s 143(3) r.w.s 147 of the Act and allow the ground of appeal of the assessee.

Issues:
1. Jurisdiction of the Assessing Officer
2. Merits of the additions made in the assessment
3. Claim of rebate under section 88E of the Income Tax Act

Jurisdiction of the Assessing Officer:
The appellant challenged the assessment order passed by the Assistant Commissioner of Income Tax and affirmed by the Commissioner of Income Tax (Appeals), contending that it was void for want of jurisdiction. The appellant argued that the re-assessment order was invalid as the necessary pre-conditions for initiation and completion of reassessment were not met. The appellant further raised objections regarding the legality and validity of the order passed, emphasizing that there was no income escaping assessment since the rent income had already been offered to tax. The appellant also questioned the lack of independent application of mind by the authorities in initiating the reassessment proceedings. The Tribunal found that the notice issued for reopening the assessment fell beyond the statutory time limit, concluding that the reassessment proceedings were a mere change of opinion without any new material. Consequently, the Tribunal quashed the assessment under section 143(3) read with section 147 of the Income Tax Act, allowing the ground of appeal raised by the assessee.

Merits of the additions made in the assessment:
Regarding the additions made in the assessment, the appellant contested the addition of rental income under the head "Income from House Property." The appellant argued that the same income had already been considered while computing taxable income under a different head, leading to potential double taxation. The Tribunal noted the appellant's contentions and found merit in the argument that adding the rental income again would result in double taxation. Additionally, the Tribunal observed that the business income of the appellant would need to be reduced by the same amount added as rental income, effectively reducing the taxable income. However, as the reassessment proceedings were annulled on jurisdictional grounds, the Tribunal did not delve further into the merits of the additions made in the assessment.

Claim of rebate under section 88E of the Income Tax Act:
The appellant also challenged the denial of the entire rebate claimed under section 88E of the Income Tax Act. The appellant contended that the rebate was rightfully claimed and had been accepted in previous years by the Department. The Tribunal considered the explanations and details provided by the appellant and noted that the claim of rebate under section 88E was valid. The Commissioner of Income Tax (Appeals) partially allowed the claim, granting a lower amount compared to what was claimed by the appellant. However, as the reassessment proceedings were declared invalid, the Tribunal did not provide a detailed analysis of the rebate claim under section 88E.

In conclusion, the Appellate Tribunal ITAT Mumbai, in its judgment, primarily focused on the jurisdictional aspect of the reassessment proceedings and found them to be invalid due to the notice being issued beyond the statutory time limit and without any new material warranting reassessment. The Tribunal, therefore, quashed the assessment under section 143(3) read with section 147 of the Income Tax Act, allowing the appeal on jurisdictional grounds. The Tribunal did not delve deeply into the merits of the additions made in the assessment or the claim of rebate under section 88E, as the annulment of the reassessment proceedings rendered further analysis on these issues unnecessary.

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