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Issues:
Reopening of assessment under section 147(a) of the IT Act, 1961 after the expiry of the prescribed period, validity of reassessment proceedings, treatment of rate differences in speculation business, jurisdiction of the assessing officer to bring in escaped income under sections 147(a) and 147(b), limitations on the assessing officer's powers in reassessment proceedings. Analysis: The judgment by the Appellate Tribunal ITAT HYDERABAD-A involved a firm engaged in ready and speculation business on commission, a member of an association conducting transactions with members and non-members. The assessing officer (ITO) separated speculation and ready business for assessment, considering rate differences in speculation transactions. The ITO disallowed rate differences in a previous year but allowed them based on an appellate order in the current year. Later, the assessment was reopened under section 147(a) based on suspicion of bogus payments related to rate differences. Despite finding payments genuine, the ITO disallowed rate differences following a Supreme Court decision, leading to an appeal. The main contention raised was whether the ITO could disallow rate differences under section 147(b) after reopening the assessment under section 147(a) post the prescribed period. The Revenue argued that the ITO had the authority to bring in any escaped assessment under both sections without limitations. However, the assessee's counsel relied on a Madras High Court judgment emphasizing the time limit for reopening under section 147(b. The Tribunal highlighted the distinction between sections 147(a) and 147(b) and the necessity for proper grounds to invoke each section. It concluded that the ITO's action was beyond jurisdiction as it sought to reassess closed issues after the expiration of the period prescribed under section 147(b). The Tribunal clarified that once an assessment is finalized, it cannot be disturbed unless through legal methods. It emphasized that the ITO's power to reassess under section 147(a) did not extend to items falling under section 147(b) after the prescribed time limit. Citing the Madras High Court decision, the Tribunal held that the ITO cannot modify the original assessment based on subsequent legal interpretations, reiterating the finality of assessments unless within the legal framework. Consequently, the Tribunal canceled the reassessment and restored the original assessment, allowing the appeal.
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