2020 (12) TMI 1195 - AT - Income Tax

Rectification of mistake - Reopening of assessment on basis of audit objection raised by Revenue Audit Party - HELD THAT - DR could not controvert the fact that before Hon'ble High Court of Madhya Pradesh it was stated on behalf of the Revenue that the assessment was not re-opened on the basis of audit objection. Hence, the Revenue has contrary stand. We therefore dismiss the Miscellaneous Application of Revenue.

Summary

Issues Involved:
1. Recalling of the ITAT order dated 22.10.2019 for the Assessment Year 2007-08.
2. Validity of reassessment proceedings under Section 147 of the Income Tax Act, 1961 based on audit objections.
3. Applicability of CBDT Circular No. 03/2018 and its amendments regarding monetary limits for appeals.

Detailed Analysis:

Issue 1: Recalling of the ITAT order dated 22.10.2019 for the Assessment Year 2007-08
The Revenue sought to recall the ITAT order dated 22.10.2019 through Miscellaneous Application No.28/Ind/2020 in ITA No.349/Ind/2017. The original assessment was completed under Section 143(3) on 19.11.2009, and the case was later reopened under Section 147 based on an audit objection. The reassessment proceedings under Section 143(3) read with Section 147 were completed on 25.02.2015 with additions made under Sections 80IA and for disallowed depreciation.

Issue 2: Validity of reassessment proceedings under Section 147 of the Income Tax Act, 1961 based on audit objections
The CIT(A) quashed the reassessment proceedings, and the Revenue's appeal to the ITAT was dismissed due to the monetary limit specified in CBDT Circular No. 03/2018. The Revenue contended that the case was reopened based on an audit objection accepted by the department, which should exempt it from the monetary limits specified in the circular. However, the assessee opposed this, stating that the reopening was not based on audit objections and referred to an affidavit filed by the AO in the High Court denying reliance on audit objections. The ITAT noted the Revenue's contradictory stand before the High Court and dismissed the Miscellaneous Application.

Issue 3: Applicability of CBDT Circular No. 03/2018 and its amendments regarding monetary limits for appeals
The ITAT dismissed the Revenue's appeal in view of the circular, which sets monetary limits for appeals to reduce litigation. The circular includes exceptions where appeals should be contested on merits regardless of the tax effect, such as cases involving constitutional validity, Board’s orders, or accepted audit objections. The Revenue argued that the case fell under the exception for accepted audit objections. However, the assessee demonstrated that the AO had previously denied the reopening was based on audit objections, making the Revenue's claim disputable and not a mistake apparent from the record. The ITAT concluded that the Miscellaneous Application could not be entertained under Section 254(2) as it involved a disputable matter rather than an apparent mistake.

Conclusion:
The ITAT dismissed the Miscellaneous Application filed by the Revenue, as the Revenue had taken a contrary stand before the High Court, and the claim of reopening based on audit objections was disputable and not an apparent mistake from the record. The order was pronounced in the open court on 28.12.2020.