2022 (7) TMI 539 - AT - Income Tax

Validity of reopening of assessment u/s 147 - Period of limitation - six year period for reopening of assessment - HELD THAT - Assessment for the impugned assessment years have been reopened, in consequential or to give effect to findings of the Tribunal in their order for the assessment year 2004-05 dated 11.10.2012 and such assessment order has been passed on 31.12.2010. Further, by the time, assessment order for the assessment year 2004-05 was passed on 31.12.2010, six year period for reopening of assessment for the assessment years 2002-03 2003-04 was expired on 31.03.2009 31.03.2010 and thus, we are of the considered view that reopening of assessment in terms of section 150(1) of the Act, is clearly barred by limitation, because of exception provided u/s. 150(2) of the Income Tax Act, 1961, and thus, notice issued u/s. 148 and consequent assessment order passed u/s. 143(3) r.w.s. 147 for the assessment years 2002-03 2003-04 is barred by limitation. Hence, we quash reassessment order passed by the Assessing Officer for both the assessment years. - Decided in favour of assessee.

Summary

Issues:
Reopening of assessments for assessment years 2002-03 & 2003-04 based on directions from the Tribunal for the assessment year 2004-05. Whether assessments for the earlier years are barred by limitation under section 150(2) of the Income Tax Act, 1961.

Analysis:
The appeals were filed against identical orders of the Commissioner of Income Tax (Appeals) for assessment years 2002-03 & 2003-04. The Appellate Tribunal noted that the facts and issues were common for both years, so the appeals were heard together. The primary contention of the assessee was that the assessments for both years were barred by limitation. The Assessing Officer had reopened the assessments based on directions from the Tribunal for the assessment year 2004-05. The assessee argued that the six-year period for reopening assessments for 2002-03 and 2003-04 had expired before the notice was issued under section 148 of the Act.

The Appellate Tribunal carefully considered the provisions of section 150(1) and 150(2) of the Income Tax Act, 1961, along with the relevant dates and events. It was observed that the assessments for 2002-03 & 2003-04 were reopened following the Tribunal's directions for 2004-05. However, the six-year limitation period for reopening the assessments for the earlier years had already expired before the assessment for 2004-05 was completed. Citing legal precedents, including decisions from the Andhra Pradesh High Court and Punjab & Haryana High Court, the Tribunal held that the reopening of assessments for 2002-03 & 2003-04 was barred by limitation under section 150(2) of the Act.

The Tribunal emphasized that while section 150(1) empowers the Assessing Officer to reopen assessments based on directions from authorities, the exception provided in section 150(2) restricts such reopening if the limitation period has expired. As the reopening of assessments for 2002-03 & 2003-04 fell outside the statutory limitation period, the Tribunal concluded that the notice issued under section 148 and the consequent assessment orders were barred by limitation. Consequently, the reassessment orders passed by the Assessing Officer for both years were quashed, and the appeals filed by the assessee were allowed.

In conclusion, the Appellate Tribunal upheld the assessee's argument regarding the limitation period for reopening assessments and ruled in favor of the assessee for both assessment years 2002-03 & 2003-04. The reassessment orders were quashed, and the appeals were allowed in favor of the assessee.