2004 (3) TMI 370 - AT - Income Tax

Summary

Issues:
Challenging the validity of reopening assessments under s. 143(3)/147 and calculation of deduction under s. 80HHC.

Analysis:

1. Validity of Reopening Assessments:
The assessee argued that the assessments for the years in question were invalidly reopened under s. 143(3)/147. The main contention was that the assessments under s. 143(1)(a) had become final, and thus, reopening them was without jurisdiction. The CIT(A) upheld the orders of the AO under s. 147, but the assessee contended that the condition precedent for exercising jurisdiction under s. 147 was absent. The case laws cited by the assessee, such as Vipan Khanna vs. CIT and CBDT Circular No. 549, supported the argument that the proceedings under s. 143(1)(a) had concluded. The CIT(A) misdirected himself by not following binding precedents and statutory directives, leading to a flawed decision.

2. Calculation of Deduction under s. 80HHC:
Another issue raised by the assessee was the calculation of deduction under s. 80HHC. The assessee objected to the reduction of the claim and challenged the mode of calculation. The CIT(A) failed to consider the legal position set out by the assessee regarding the correct working of the deduction under s. 80HHC. The assessee argued that the reopening of the assessment under s. 147 was aimed at reworking the deduction under s. 80HHC, which was not permissible under the circumstances where the assessments under s. 143(1)(a) had already become final.

3. Decision and Analysis:
The ITAT, after hearing both parties and considering the arguments presented, held in favor of the assessee. The ITAT opined that the matter could have been rectified under s. 154 instead of reopening under s. 147, as it appeared to be a mere change of opinion. The ITAT found that the reopening of the assessments was not justified and quashed the orders impugned. The ITAT also noted administrative indiscipline and granted the prayer of the assessee regarding the validity of the reopening of the assessment. Consequently, the appeals of the assessee were allowed, and the orders impugned were quashed based on the lack of justification for reopening the assessments and the change of opinion without proper grounds.