2023 (9) TMI 1030 - AT - Income Tax

Validity of the reassessment order framed u/s 143(3) r.w.s 147 in the absence of fresh tangible materials - assessee contended that the AO has formed reasons to believe that the income of the assessee has escaped assessment merely on verification of the same set of documents which were available during the assessment proceedings - HELD THAT - What is emerging from the above reasons is this that the AO has initiated the proceedings after verification of the case records which implies that there was no fresh tangible material available on record distinct from what was available during the original assessment proceedings. Thus, in the absence of any fresh material coming to the notice of the AO giving rise to draw the reasons to believe that the income of the assessee has escaped assessment, in our considered view, is without any basis and therefore the proceedings initiated under section 147 of the Act is liable to be quashed. Thus we are of the opinion that the reopening is not as per the provisions of law but based on the same set of documents which were available during the original assessment proceedings. Accordingly, we quashed the proceedings initiated u/s 147 of the Act. Decided in favour of assessee.

Summary

Issues involved:
The appeal challenges the order of the Learned Commissioner of Income Tax (Appeals) related to the assessment order passed under s. 143(3) r.w.s 147 of the Income Tax Act 1961 for the Assessment Year 2015-16.

Challenge to Validity of Reassessment Order:
The Assessee challenged the validity of the reassessment order framed under section 143(3) read with section 147 of the Act, arguing the absence of fresh tangible materials.

Assessment Details and Disallowances:
The Assessee, an LLP, was assessed under section 143(3) of the Act for specific items. The assessment accepted the disclosed income. However, discrepancies were found regarding business income and set off of losses against interest income, leading to disallowances under section 14A.

Jurisdictional Issues and Reopening of Assessment:
The Assessee contended that the AO exceeded jurisdiction during reassessment by addressing issues not part of the original limited scrutiny. The AO's actions were deemed a change of opinion without fresh tangible material, contrary to the provisions of section 147.

Judgment and Conclusion:
The Tribunal found that the reassessment lacked fresh tangible material and was based on documents available during the original assessment, leading to the quashing of proceedings under section 147. Citing legal precedents, the Tribunal allowed the appeal on technical grounds, rendering the merit-based issues moot. Consequently, the appeal was partly allowed.

Separate Judgment:
The judgment was pronounced in the Court on 02/08/2023 at Ahmedabad.