2020 (12) TMI 459 - AT - Income Tax

Validity of reopening of assessment - Eligibility of reasons to believe - reliance on same set of facts - Whether no new tangible material that had come to the possession of the Assessing Officer on the basis of which the assessment was re-opened? - HELD THAT - A perusal of the reasons recorded by the Assessing Officer also clearly shows that the assessment was re-opened by him on the basis of same set of facts and the material which was available on record and there was no new tangible material that had come to his possession which formed the basis of re-opening. Even the Ld. D.R. has not been able to dispute this possession which is clearly evident from the reasons recorded by the Assessing Officer. He has also not been able to point out any such fresh tangible material that had come to the possession of the Assessing Officer which formed the basis of reopening. CIT(A) was fully justified in holding the re-assessment proceedings to be invalid by relying on the said decision Sandvik System Development 2017 (12) TMI 571 - ITAT PUNE since there was no fresh tangible material which had come to the possession of the Assessing Officer and which formed the basis of reopening. Therefore uphold the impugned order of the Ld. CIT(A) on this issue and dismiss this appeal filed by the Revenue.

Summary

Issues:
Validity of re-assessment proceedings initiated by the Assessing Officer.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) challenging the treatment of re-assessment proceedings as invalid. The Assessing Officer re-opened the assessment due to the claim made by the individual assessee regarding salary earned in the UK. The assessee contended that the salary was not taxable in India as per the UK DTAA. The Assessing Officer, however, completed the assessment under section 143(3) r.w.s 148 of the Act, taxing the income in India. The Commissioner of Income Tax (Appeals) found merit in the preliminary issue raised by the assessee, canceling the assessment on the grounds that there was no fresh tangible material to reopen the case under section 147 of the Act. The decision was supported by a previous ITAT judgment, emphasizing the necessity of tangible material to establish the reason to believe of income escapement. The Commissioner held the re-assessment proceedings as invalid and bad in law, canceling the assessment.

The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals), stating that the re-opening of assessment was invalid as it was based on the same set of facts and material without any new tangible evidence. The Tribunal noted that the Assessing Officer did not have any fresh material to support the re-opening of the assessment. Referring to the ITAT judgment, the Tribunal emphasized the requirement for tangible material to establish the reason to believe of income escapement. As there was no new material in this case, the Tribunal affirmed the decision to cancel the re-assessment made by the Assessing Officer. Consequently, the appeal filed by the Revenue was dismissed.

The Cross-Objections filed by the assessee were deemed infructuous following the dismissal of the Revenue's appeal. The Tribunal dismissed the Cross-Objections as agreed by the counsel for the assessee. Ultimately, both the appeal filed by the Revenue and the Cross-Objections filed by the assessee were dismissed by the Tribunal.