2008 (10) TMI 658 - HC - Income Tax

Assessment-Reassessment under section 143(3),147 No new Information The Tribunal took the view that no new information/material had come to the Assessing Officer after completing the original assessment to form any belief about the escapement of the assessee s income and that such a belief was entirely based on reappraisal or reconsideration of the material/information already available on record at the time of completion of the original assessment. The tribunal also noted that the letter which was relied upon by the Department as the new information/material coming into the possession of the Assessing Officer was a letter dated August 28, 1999. The Tribunal arrived at the conclusion that the reassessment under section 147/143(3) was not justified as no new material had come before the Assessing officer. Thus it cannot be said that any income had escaped assessment. Taking note of the Supreme Court decision in the case of Indian and Eastern Newspaper Society v. CIT 1979 119 ITR 996 the Tribunal accepted the assessee s plea that the reopening of the assessment was not warranted under law. Consequently, the reassessment completed by the Assessing Officer under section 147/143(3) of the said Act was quashed. In this case Delhi High Court-held that the Tribunal has correctly appreciated the law No interference with the decision of the Tribunal is called for. In any event, no substantial question of law arises for our consideration. The appeal is dismissed. Decision in favor of assessee against the revenue

Summary

Issues:
1. Validity of reassessment proceedings under section 147/143(3) of the Income-tax Act, 1961.

Analysis:
The judgment in I. T. A. No. 1237 of 2008 dealt with the validity of reassessment proceedings under section 147/143(3) of the Income-tax Act, 1961, for the assessment year 1998-99. The main issue raised in the appeal was the Tribunal's decision that the reassessment proceedings were invalid. The Tribunal found that the reassessment, done under section 147(3), was not justified as no new material had come before the Assessing Officer to believe that any income had escaped assessment. The Department relied on a letter dated August 28, 1999, as new information, but the Tribunal noted that this letter could not constitute new information as the assessment order was passed after its date. The Tribunal concluded that the reassessment was based on a reappraisal of existing material, not new information, and cited the Supreme Court decision in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 to support the assessee's plea that the reassessment was unwarranted under the law. Consequently, the reassessment by the Assessing Officer was quashed.

The Tribunal's decision was based on a correct understanding of the law, and no interference was warranted. The High Court found that no substantial question of law arose for consideration and dismissed the appeal. The judgment affirmed the Tribunal's decision to quash the reassessment, emphasizing that the reassessment was not supported by new information but was a mere reconsideration of existing material. The High Court's decision upheld the principle that reassessment cannot be based on a reappraisal of material already available during the original assessment. The judgment highlighted the importance of new, substantive information to justify reassessment under the Income-tax Act, 1961, and reinforced the need for a valid basis to believe that income had escaped assessment.