1982 (6) TMI 94 - AT - Income Tax

Summary

Issues:
Reassessment jurisdiction under section 147(a) and 147(b) - Application of mind by assessing officer during original assessment - Justification of reassessment based on change of opinion - Reopening assessment based on information from revenue audit party - Consideration of all material facts during original assessment - Cancellation of reassessment by CIT (Appeals) - Challenge to reassessment by revenue and assessee - Apprehension regarding unconsidered additions in case of appeal reversal.

Analysis:
The judgment by the Appellate Tribunal ITAT Chandigarh involved cross-appeals by the assessee and the revenue against the CIT (Appeals) order related to the assessment year 1977-78. The revenue contended that the reassessment by the ITO was justified under section 147(a) as the assessing officer had not applied his mind during the original assessment, and information from the revenue audit party constituted valid grounds for reopening the assessment under section 147(b). The assessee argued that all relevant material, including balance sheets and partner accounts, was considered during the original assessment, and the reassessment was merely a change of opinion influenced by the revenue audit party.

The Tribunal examined the facts and held that the reassessment was not justified under either section 147(a) or 147(b). It was noted that the assessing officer had considered all material facts during the original assessment, including partner accounts and interest details. The Tribunal found that the reassessment was based on a change of opinion influenced by the revenue audit party, rather than new information warranting reassessment. The Tribunal agreed with the CIT (Appeals) decision to cancel the reassessment, as it was deemed ab initio void.

The Tribunal dismissed the revenue's appeal, affirming the cancellation of the reassessment. Regarding the assessee's appeal, based on apprehension of unconsidered additions if the CIT (Appeals) decision was reversed, the Tribunal held that since the reassessment was deemed void, the appeal by the assessee became moot. Ultimately, both appeals were dismissed, upholding the cancellation of the reassessment by the CIT (Appeals).