2022 (9) TMI 874 - AT - Income Tax

Reopening of assessment u/s 147 - notice beyond 4 years after the completion of relevant assessment years - same issue allowed to be taken second round or not? - HELD THAT - The assessee was assessed twice in same assessment year in same issue. In first phase, the appeal was completed on basis of the part relief. ITAT allowed the assessee s appeal on basis of the technical ground. The same issue which the CIT(A) had disallowed in first phase was taken as subject matter of reopening as recorded reasons by the assessing authority. In second phase the notice u/s 148 was issued by the ld AO. The same issue cannot be agitated twice. There is no such any fresh material - See Kelvinator of India 2010 (1) TMI 11 - SUPREME COURT The assessing authority had reopened the issue which was already taken in the assessment order u/s 143(3) of the Act. The same issue cannot be taken second round on the ground that the ld. CIT(A) had disallowed. The ITAT had quashed the revenue appeal on technical ground and the issues were untouched by the ITAT.Therefore, the Assessing Officer was indeed in error in adopting such a hyper-pedantic approach and in holding that there was valid reopening U/s 148 on the issue which were already delt in first phase of assessment U/s 143(3) of the Act in same assessment year. Recorded reason is itself bad in law and the assessment order is liable to be quashed. Appeal of assessee allowed.

Issues involved:
1. Validity of notice issued under section 147/148 of the Income Tax Act.
2. Consideration of past history and case laws by the Commissioner of Income Tax (Appeals).
3. Reopening of assessment based on confirmed addition by the Commissioner of Income Tax (Appeals).
4. Double assessment on the same issue within the same assessment year.
5. Legal validity of the reasons recorded by the Assessing Officer for issuing notice under section 147/148.
6. Adjudication of the grounds raised by the assessee during appeal proceedings.

Analysis:

1. Validity of notice issued under section 147/148 of the Income Tax Act:
The appeal challenged the notice issued under section 147/148 of the Income Tax Act for the assessment year 2007-08. The Assessing Officer initiated proceedings based on the belief that income had escaped assessment. The appellant contended that the notice was beyond the prescribed time limit of four years after the relevant assessment year. The counsel argued that the notice was issued without proper recording of satisfaction by the Assessing Officer, relying on borrowed satisfaction, and without any new material justifying the reopening. The issue of the validity of the notice was crucial in determining the legality of the reassessment.

2. Consideration of past history and case laws by the Commissioner of Income Tax (Appeals):
The appellant raised concerns regarding the consideration of past history and relevant case laws by the Commissioner of Income Tax (Appeals) in making additions to the assessed income. The appellant argued that the CIT(A) failed to take into account the past decisions and case laws that supported a lower profit rate, resulting in unjustified additions to the income. The appellant sought the deletion of additions made by the CIT(A) based on these grounds.

3. Reopening of assessment based on confirmed addition by the Commissioner of Income Tax (Appeals):
The Assessing Officer reopened the assessment for the appellant based on the confirmed addition made by the CIT(A) in a previous appeal. The appellant contested this action, arguing that reassessment on the same issue that was already adjudicated in the first phase of assessment was impermissible. The appellant highlighted that the ITAT had quashed the revenue appeal on technical grounds, and the issues remained untouched. The appellant sought relief from the reassessment based on the previously confirmed addition.

4. Double assessment on the same issue within the same assessment year:
The appellant emphasized that being assessed twice on the same issue within the same assessment year was improper and against the principles of tax law. The ITAT had allowed the appellant's appeal in the first phase based on technical grounds, and the reassessment on the same issue was deemed unjustified. The appellant argued that the same issue cannot be agitated twice, especially without any new material warranting reassessment.

5. Legal validity of the reasons recorded by the Assessing Officer for issuing notice under section 147/148:
The counsel for the appellant challenged the legal validity of the reasons recorded by the Assessing Officer for issuing the notice under section 147/148 of the Income Tax Act. The appellant contended that the reasons were insufficient, and the notice was based on borrowed satisfaction without any fresh material justifying the reassessment. The appellant relied on relevant case laws and judgments to support the argument that the notice was issued in violation of legal requirements.

6. Adjudication of the grounds raised by the assessee during appeal proceedings:
The Tribunal considered the grounds raised by the appellant during the appeal proceedings, including challenges to the validity of the notice, past history considerations, and the double assessment issue. After hearing the rival submissions and reviewing the documents, the Tribunal found in favor of the appellant. The Tribunal concluded that the reassessment was unwarranted, given the previous adjudication and lack of new material justifying the reassessment. The Tribunal allowed the appeal, emphasizing the error in adopting a hyper-pedantic approach by the Assessing Officer.

This comprehensive analysis covers the key issues raised in the legal judgment, providing a detailed examination of each aspect of the case.

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