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2016 (6) TMI 418 - AT - Income TaxReopening of assessment - determination of loss - Held that - The Third Member found that the notice issued by the Assessing Officer u/s 148 r.w.s 150(1) of the Act cannot be said to be based on any finding or direction of the Tribunal The Third Member also held that the notice issued by the Assessing Officer u/s 148 of the Act is barred by limitation. In view of the majority opinion, the orders of the lower authorities are quashed and the appeal of the assessee is allowed.
Issues Involved:
1. Validity of reopening assessment under Section 147 of the Income Tax Act. 2. Applicability of Section 150(1) and Section 150(2) of the Income Tax Act. 3. Limitation period for issuing notice under Section 148 of the Income Tax Act. 4. Interpretation of findings or directions by the Tribunal in previous assessment years. 5. Application of Section 50C of the Income Tax Act. Detailed Analysis: 1. Validity of Reopening Assessment Under Section 147: The assessee argued that the reopening of the assessment for the year 2001-02 was beyond the period of limitation as prescribed under Section 149 of the Income Tax Act. The initial assessment was completed on 30.03.2006, and the notice for reopening was issued on 10.06.2011. The assessee contended that the notice was issued beyond the permissible period of six years from the end of the relevant assessment year. The Tribunal found that the reopening of the assessment was not valid as the period of limitation had expired. The Tribunal referred to the Supreme Court judgment in K.M. Sharma v. ITO, which held that reopening assessments after the period of limitation is not permissible. 2. Applicability of Section 150(1) and Section 150(2): The assessee argued that Section 150(1) should not be applied as there was no specific finding or direction by the Tribunal to assess the income for the year 2001-02. Section 150(1) allows reopening of assessments notwithstanding the limitation period if there is a finding or direction by an appellate authority. However, Section 150(2) restricts this by stating that reopening cannot be done if the period of limitation had already expired when the appellate order was passed. The Tribunal held that the provisions of Section 150(1) are not applicable as there was no specific finding or direction by the Tribunal to assess the income for the year 2001-02. The Tribunal also noted that the limitation period had expired by the time the Tribunal passed its order in 2010, making the reopening invalid under Section 150(2). 3. Limitation Period for Issuing Notice Under Section 148: The assessee contended that the notice issued under Section 148 on 10.06.2011 was beyond the permissible period of six years from the end of the relevant assessment year, which expired on 31.03.2008. The Tribunal agreed with the assessee, noting that the limitation period had indeed expired, and therefore, the notice issued was barred by limitation. 4. Interpretation of Findings or Directions by the Tribunal: The assessee argued that the Tribunal's order for the assessment years 2003-04 and 2004-05 did not contain any specific finding or direction to assess the income for the year 2001-02. The Tribunal observed that the earlier order only stated that the capital gain could not be taxed for the years 2003-04 and 2004-05 as the transfer took place in the year 2000. This was not a specific direction to assess the income for the year 2001-02. The Third Member agreed with this interpretation, stating that the observation made by the Tribunal in the earlier order could not be considered a finding or direction to assess the income for the year 2001-02. 5. Application of Section 50C: The assessee argued that Section 50C, which pertains to the valuation of capital assets, was not applicable for the assessment year 2001-02 as it came into effect from the assessment year 2003-04. The Tribunal did not specifically address this issue in detail due to the primary focus on the validity of reopening the assessment and the limitation period. Conclusion: The Tribunal concluded that the reopening of the assessment for the year 2001-02 was invalid as it was beyond the period of limitation. The notice issued under Section 148 was barred by limitation, and there was no specific finding or direction by the Tribunal to assess the income for the year 2001-02. The orders of the lower authorities were quashed, and the appeal of the assessee was allowed.
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