2013 (11) TMI 1449 - AT - Income Tax

Reopening u/s 147 where assessment subsequent to issuance of intimation u/s 143(1) - Held that - The AO reopened the cases on the basis of documents attached with the return of income - There was no other material from which the Assessing Officer had arrived at the conclusion that income of the assessee had escaped assessment - Following CIT v. Orient Craft Ltd. 2013 (1) TMI 177 - DELHI HIGH COURT - Reopening in the cases processed u/s 143(1) is not permissible if there is no tangible material which came to the possession of Assessing Officer subsequent to issue of intimation u/s 143(1) - The Assessing Officer reached the belief that there was escapement of income on going through the return of income filed by the assessee after accepting the return under Section 143(1) without scrutiny - This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer - The reopening u/s 147/148 was not justified as Assessing Officer had no other documents/information other than the annexure attached with the return of income and therefore though returns were processed u/s 143(1) the reopening has been done on the change of opinion which is not permitted under the law - The reopening has been held to be not legal and assessment order has been quashed - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of reopening the cases under Section 147/148 of the Income Tax Act.
2. Addition of Rs. 2,18,550 under the head "Income from House Property."
3. Non-acceptance of income under the head "Business" as returned.
4. Charging of penal interest under Sections 234B and 234D of the Income Tax Act.
5. Grounds of appeal being without prejudice to each other.
6. Right to alter, modify, or withdraw any ground of appeal.

Issue-wise Detailed Analysis:

1. Legality of Reopening the Cases Under Section 147/148 of the Income Tax Act:
The assessee challenged the reopening of the assessments under Section 147/148, arguing that the Assessing Officer (A.O.) had no material other than the documents attached with the return of income. The Delhi High Court's decision in CIT v. Orient Craft Ltd. was cited to support the claim that reopening was illegal without any tangible material. The Tribunal found that the A.O. reopened the cases based solely on the details attached with the returns, without any new material. The Tribunal referenced the Delhi High Court's judgment, which held that reopening under Section 147/148 is not permissible if there is no new tangible material after the initial processing under Section 143(1). Consequently, the Tribunal ruled that the reopening was not justified, thereby allowing the first ground of appeal.

2. Addition of Rs. 2,18,550 Under the Head "Income from House Property":
The Tribunal did not specifically address this issue in detail as the primary ground regarding the legality of reopening the cases was decided in favor of the assessee. Since the reopening was deemed illegal, the assessment order itself was quashed, rendering this issue moot.

3. Non-Acceptance of Income Under the Head "Business" as Returned:
Similar to the second issue, this matter was not specifically adjudicated upon as the Tribunal's decision on the legality of reopening the cases rendered the assessment order invalid. Therefore, the Tribunal did not need to address the merits of this issue.

4. Charging of Penal Interest Under Sections 234B and 234D of the Income Tax Act:
This issue was also not specifically analyzed due to the quashing of the assessment order. Since the reopening of the cases was found to be illegal, the Tribunal did not delve into the merits of the penal interest charged under Sections 234B and 234D.

5. Grounds of Appeal Being Without Prejudice to Each Other:
This was a procedural ground indicating that the various grounds of appeal were independent and not mutually exclusive. The Tribunal's ruling on the primary ground regarding the legality of reopening the cases meant that this procedural aspect did not require further discussion.

6. Right to Alter, Modify, or Withdraw Any Ground of Appeal:
This procedural right reserved by the appellant did not come into play as the Tribunal ruled in favor of the assessee on the primary ground of appeal.

Conclusion:
The Tribunal allowed the appeals filed by the assessee, ruling that the reopening of the cases under Section 147/148 was not justified as it was based solely on a change of opinion without any new tangible material. Consequently, the assessment orders were quashed, and the other grounds of appeal did not require adjudication. The Tribunal's decision was pronounced in the open court on July 26, 2013.