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2012 (10) TMI 100 - AT - Income TaxReopening assessment u/s 147 - addition to income - Held that - A.O. while reopening the assessment dated 16.08.2010, which is under appeal, considered only two items of income. First one is Rs.42,03,882/- as per original assessment under section 143(3) dated 29.12.2006 which has been deleted by CIT(A) in the appeal filed by the assessee against the AO s order dated 29.12.2006. Therefore, this part of the income does not survive and liable to be deleted. The second item of income is Rs.17,18,669/- which has been made by the A.O. on the basis of direction by the CIT(A) which was while passing the order in A.Y. 2004-05 has quashed by I.T.A.T. Thus, when the direction itself has been quashed, there is no question of taking action under section 147 in A.Y. 2005-06. Therefore, this addition also does not survive. Since the amount of total income including addition made by the A.O. of Rs.17,18,669/- does not survive in the light of the order of CIT(A) dated 29.10.2010 for A.Y. 2005-06 and the order of I.T.A.T. for A.Y. 2004-05 therefore, there is no question of computing the assessee s total income at Rs.59,22,551 (42,03,882 17,18,669). Thus, both the amounts of income are hereby deleted.
Issues Involved:
1. Non-service of notice under sections 142(1) and 144(1) of the Income Tax Act. 2. Validity of proceedings initiated under sections 147/148. 3. Deletion of addition of Rs.42,03,882/- by CIT(A). 4. Exemption claim under section 10(23C)(iiiad). 5. Addition of Rs.17,18,669/- on account of undisclosed investment in property. 6. Impact of ITAT's decision on directions issued by CIT(A) for A.Y. 2004-05 on the assessment for A.Y. 2005-06. Detailed Analysis: Issue 1: Non-service of Notice under Sections 142(1) and 144(1) The assessee contended that the authorities failed to serve a notice under section 142(1) or any show-cause notice as required by section 144(1), rendering the assessment under sections 148/144 invalid. However, the CIT(A) held that the AO provided an opportunity for a hearing before making the assessment under section 144, thus rejecting this ground. Issue 2: Validity of Proceedings under Sections 147/148 The assessee argued that the initiation of proceedings under sections 147/148 lacked the self-satisfaction of the AO and was influenced by the CIT(A), making the assessment void. The Tribunal found that the reopening of the assessment was based on directions from the CIT(A) for A.Y. 2004-05, which were later quashed by the ITAT. Therefore, the basis for reopening under section 147 for A.Y. 2005-06 was invalid. Issue 3: Deletion of Addition of Rs.42,03,882/- by CIT(A) The Revenue contested the deletion of Rs.42,03,882/- by the CIT(A), arguing that the CIT(A) did not adjudicate the merits of the additions made by the AO. The Tribunal noted that the CIT(A) had deleted this addition in the original assessment order dated 29.10.2010, and this deletion was not disputed. Consequently, this amount could not form the basis for reopening the assessment under section 147. Issue 4: Exemption Claim under Section 10(23C)(iiiad) The Revenue challenged the CIT(A)'s acceptance of the assessee's claim for exemption under section 10(23C)(iiiad). The Tribunal found that the CIT(A) had already held that the income of the assessee was exempt under this section, and no cross-appeal was filed by the Revenue against this finding. Therefore, the exemption claim stood valid. Issue 5: Addition of Rs.17,18,669/- on Account of Undisclosed Investment in Property The AO added Rs.17,18,669/- based on directions from the CIT(A) in A.Y. 2004-05. However, the ITAT quashed these directions, stating that the CIT(A) could not direct additions in subsequent years. The Tribunal held that since the direction itself was quashed, the addition of Rs.17,18,669/- did not survive. Issue 6: Impact of ITAT's Decision on Directions Issued by CIT(A) for A.Y. 2004-05 The ITAT's decision in ITA No.464/Agr/2009 for A.Y. 2004-05 quashed the CIT(A)'s direction to make additions in A.Y. 2005-06. The Tribunal emphasized that the CIT(A) could not issue directions for subsequent years, and any such direction was invalid. This decision rendered the reopening of the assessment for A.Y. 2005-06 baseless. Conclusion: The Tribunal allowed the assessee's appeal regarding the additional ground and dismissed the Revenue's appeal. The additions of Rs.42,03,882/- and Rs.17,18,669/- were deleted, and the assessment for A.Y. 2005-06 was rendered invalid due to the quashing of the CIT(A)'s directions for A.Y. 2004-05. The exemption under section 10(23C)(iiiad) was upheld, and the proceedings under sections 147/148 were found to be invalid.
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