2018 (5) TMI 1376 - AT - Income Tax

Reopening of assessment - reopening on basis of objections by the revenue audit party - Difference in credited interest income and gross interest as reflected from TDS certificates furnished by the assessee - Held that - As we observed from the record that the assessee had already filed the TDS certificates in the original assessment proceedings before the AO and the AO has mentioned in para 4 that the details of TDS was called for and in para 5 its clearly mentioned that after verification of computation of income the assessment is framed. We noted that in the statement of total income, the assessee has claimed the TDS on interest and the details of the same were filed with the AO at the time of assessment proceedings. We are of the view that the case of the assessee has wrongly been re-opened, which is beyond jurisdiction and not permissible as the same was done on the basis of same materials as was before the AO in the original assessment proceedings. - Decided in favour of assessee.

Summary

Issues:
1. Ex-parte order passed by CIT(A) without providing adequate opportunity for hearing.
2. Confirmation of Assessing Officer's action in reopening the assessment under section 147 of the Income Tax Act, 1961.
3. Addition of interest income on account of alleged discrepancies.
4. Validity of re-opening the assessment based on new tangible material or change of opinion.

Analysis:
1. The appellant challenged the ex-parte order passed by the CIT(A) for assessment year 2006-07, alleging inadequate opportunity for being heard. The first ground of appeal was dismissed as not pressed by the appellant, leading to its dismissal.

2. Ground two contested the confirmation of the Assessing Officer's action in reopening the assessment under section 147. The AO re-opened the assessment citing discrepancies in rent payment and interest income, leading to under-assessment. The appellant argued that there was no new tangible material for re-opening, and it was a case of change of opinion by the AO. The DR supported the re-opening citing information from the audit party as new tangible material. However, the Tribunal found that the AO had all relevant information during the original assessment, rendering the re-opening invalid. The appeal was partly allowed on this ground.

3. The third issue involved the addition of interest income due to discrepancies. The CIT(A) upheld the AO's decision, but the Tribunal found the re-opening of the assessment beyond jurisdiction due to lack of new material. Consequently, the appeal succeeded on this technical and legal issue, making the discussion on merits unnecessary.

4. The Tribunal's decision rested on the invalid re-opening of the assessment, rendering the other grounds raised on merits irrelevant. The appeal was partly allowed based on the legal and technical grounds discussed, leading to the pronouncement of the order on May 15, 2018.