2023 (6) TMI 1127 - AT - Income Tax

Validity of reassessment proceedings - reopening notice, being issued before the end of the assessment year - belated return of income filed - DR argued that since the assessee had not filed the original return of income u/s 139(1) the AO was duly justified in reopening the assessment u/s 147 - HELD THAT - When the return of income is not filed within the due date prescribed u/s 139(1) AO is entitled as per the statute to issue notice under section 142(1) of the Act calling for the return of income. Without resorting to this statutory provision, the learned AO cannot directly proceed to reopen the assessment. In any case, when the due date for filing the return of income is available in terms of section 139(4) to the assessee, how there could be any satisfaction on the part of the AO to conclude that the income of the assessee has escaped assessment. Hence, the very basis of reopening deserves to be quashed for want of any satisfaction that could be legally recorded. The reopening made by learned AO deserves to be quashed on this count also. As the return filed by the assessee on 06.10.2015 is a return filed belatedly u/s 139(4) of the Act. Nothing prevented the learned Assessing Officer to select this return for scrutiny and frame the assessment in accordance with law. When this provision is available with the learned Assessing Officer, where is the need for him to issue reopening notice that too before the end of the assessment year itself. Hence the reopening notice issued u/s 148 of the Act in the instant case is to be declared premature. Revenue cannot resort to reopening proceedings merely because a particular return is not selected for scrutiny. Reopening of an assessment cannot be resorted to as an alternative for not selecting a case for scrutiny. There should be conscious formation of belief based on tangible information that income of an assessee had escaped assessment. No hesitation to quash the reassessment proceedings framed by learned AO as void ab-initio - Decided in favour of assessee.

Summary

Issues involved:
The judgment addresses the validity of assumption of jurisdiction by the learned Assessing Officer in the reassessment proceedings for the assessment year 2014-15.

Grounds of Appeal:
1. The appellant corporation's eligibility under section 10(26BBB) of the Income Tax Act, 1961, pertaining to its establishment for the welfare and economic upliftment of ex-servicemen.
2. The legality of the order passed by the Assessing Officer under section 143(3)/147 of the Income Tax Act, 1961.
3. The premature issuance of notice under section 148 by the Assessing Officer before the end of the assessment year itself.
4. The right to amend or modify the grounds of appeal.

Validity of Jurisdiction:
The Tribunal found that the Assessing Officer issued a notice under section 148 prematurely, before the due date for filing the belated return under section 139(4) of the Act. The Tribunal held that the reopening notice was premature and lacked legal basis, as the Assessing Officer could have selected the belated return for scrutiny instead of issuing a reopening notice.

Legal Precedents and Rulings:
The Tribunal referred to various judicial precedents to support its decision to quash the reassessment proceedings. It highlighted that the Assessing Officer's action in issuing notice under section 148 was invalid as the return was filed within the prescribed time under section 139(4) of the Act. The Tribunal emphasized that the reopening notice was premature and lacked the necessary legal basis, ultimately leading to the allowance of the appeal.

Conclusion:
The Tribunal allowed the appeal of the assessee, declaring the reassessment proceedings framed by the Assessing Officer as void ab-initio. The Tribunal's decision was based on the lack of legal grounds for the premature reopening notice issued under section 148. The judgment was pronounced in Open Court on 23rd June 2023.