2014 (7) TMI 949 - AT - Income Tax

Reopening of assessment u/s 147 Expenses on purchase of software Principle of consistency - Held that - CIT (A) has simply affirmed the reassessment order without deciding the issue in its right perspective by only saying that objection of the assessee was raised before the AO which is not valid in law and has not considered the issue properly - Following the decision in M/s. Chroma Print, C/o. Shri TN. Seetharaman, Advocate Versus The Assistant Commissioner of Income Tax, Circle-II 2012 (8) TMI 520 - ITAT, CHENNAI also in ALF Firm Vs. CIT 1991 (2) TMI 1 - SUPREME Court it has been held that reassessement cannot be based on bare or mere change of opinion - In order to maintain consistency in the decision making process and to avoid conflicting orders, the entire appeal should go back to the CIT(A) - both the issues in appeal have overlapping effect, they cannot be decided independently by two different authorities matter is remitted back to the CIT(A) to pass order on the issue of re-opening of assessment Decided in favour of Assessee.

Summary

Issues:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961.
2. Disallowance of expenditure towards purchase of software.

Issue 1: Reopening of Assessment under Section 147:
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) regarding the reopening of assessment under section 147 of the Income Tax Act, 1961. The Tribunal found that the Commissioner did not consider the issue properly and remitted the matter back to the Commissioner to decide afresh by considering the case laws relied on by the assessee. The Tribunal allowed the appeal for statistical purposes, setting aside the impugned order and directing a fresh decision on the issue of reopening under section 147.

Issue 2: Disallowance of Expenditure towards Purchase of Software:
The Assessing Officer held the expenditure of D.24,40,453 towards the purchase of software as capital in nature, while the assessee claimed it as revenue expenditure. The Commissioner of Income Tax (Appeals) dismissed the appeal of the assessee, prompting the assessee to come in second appeal before the Tribunal. The Tribunal, after considering the facts and circumstances, decided to maintain consistency in decision-making and avoid conflicting orders. Therefore, the Tribunal set aside the impugned order and remitted the file back to the Commissioner of Income Tax (Appeals) to pass an order on the issue of reopening of assessment as well as on merits after providing an opportunity of hearing to the assessee. The appeal of the assessee was allowed for statistical purposes.

The Tribunal's judgment in this case addressed the issues of reopening of assessment under section 147 and the disallowance of expenditure towards the purchase of software. The Tribunal emphasized proper consideration of case laws and facts by the Commissioner of Income Tax (Appeals) and the need for consistency in decision-making to avoid conflicting orders. The Tribunal remitted the matters back to the Commissioner for fresh decisions, ensuring a fair opportunity for the assessee to present their case. Ultimately, the appeal of the assessee was allowed for statistical purposes, providing a comprehensive resolution to the legal issues involved in the case.