2023 (11) TMI 734 - AT - Income Tax

Reopening of assessment - reopening after a period of four years - assumption of jurisdiction u/s 147 r.w. Section 148 r.w. Section 151 - Original assessment was made u/s 143(3) - HELD THAT - A perusal of the case record would show that a completed assessment has been reopened on the grounds of purported misuse of National Stock Exchange Platform to obtain contrived loss and siphon out profits earned having regard to the information disseminated by ADIT (Inv.) Ahmedabad. AO has neither incorporated transaction-wise detail in the reasons recorded alleging fictitious losses nor it has been recorded anywhere in the reassessment proceedings. The so called belief formed towards escapement and initiation of vexatious proceedings is apparently without any elementary details. On a reading of reasons recorded, it gives an impression that AO has acted on dotted lines at the dictate of investigation wing without application of mind on the basic and elementary facts. While recording the reasons, AO has not taken cognizance of the fact that assessment has already been framed u/s 143(3) of the Act in the past. Once the assessment has been carried out u/s 143(3) of the Act, the 1st proviso casts exemplary burden on the Revenue to shun embargo of limitation. The onus lies on the Revenue to point out that there is a failure on the part of the assessee to disclose material facts fully and truly indeed. The onus placed by 1st proviso has been clearly overlooked in the instant case. It is apparent that Pr.CIT has also acted perfunctorily while granting approval sought by AO under the shelter of Section 147(b) as pointed out on behalf of the assessee. We have thus no hesitation to hold that the jurisdiction assumed u/s 147 in the instant case suffers from multiple jurisdictional defects and hence such assumption of jurisdiction is outside the legal framework so provided. The action invoked by the AO and Pr.CIT are justiciable the jurisdiction assumed cannot be reactivated beyond the particular stage and after a lapse of time limit. It is evident that notice issued u/s 148 is without jurisdiction and consequent reassessment framed for Assessment Year 2009-10 in question is bad in law and hence quashed. Assessee appeal allowed.

Summary

Issues Involved:
1. Validity of re-assessment proceedings under Section 147 of the Income Tax Act, 1961.
2. Legality of additions/disallowances made by the Assessing Officer.
3. Charging of interest under Sections 234B and 234C of the Income Tax Act, 1961.

Summary:

1. Validity of Re-assessment Proceedings:
The assessee challenged the jurisdiction assumed by the Assessing Officer (AO) under Section 147 r.w. Section 148 r.w. Section 151 of the Income Tax Act, 1961. The primary contention was that the re-assessment proceedings initiated after a period of four years from the end of the relevant assessment year were barred by limitation and void. The assessee argued that the AO did not apply his mind in recording satisfaction for re-opening the assessment and that there was non-application of mind by superior authorities while giving approval for re-opening the assessment.

The Tribunal found merit in the assessee's plea, noting that the reasons recorded for re-opening the assessment were vague and lacked specific details of transactions involving Client Code Modification (CCM). The AO acted on the information provided by the ADIT (Inv.) Ahmedabad without independent application of mind. Furthermore, the Tribunal observed that the Pr.CIT acted mechanically and perfunctorily while granting approval under Section 151 of the Act, based on incorrect assumptions. The Tribunal concluded that the jurisdiction assumed under Section 147 of the Act suffered from multiple jurisdictional defects and was outside the legal framework, rendering the notice issued under Section 148 and the consequent reassessment for AY 2009-10 as bad in law and thus quashed.

2. Legality of Additions/Disallowances:
Given the Tribunal's decision on the jurisdictional issue, it did not adjudicate the merits of the AO's action regarding the additions/disallowances made in the reassessment proceedings.

3. Charging of Interest under Sections 234B and 234C:
The Tribunal did not specifically address the issue of charging interest under Sections 234B and 234C, as the primary jurisdictional issue rendered the reassessment proceedings void.

Conclusion:
The appeal of the assessee was allowed, and the reassessment proceedings for AY 2009-10 were quashed due to jurisdictional defects. The Tribunal did not delve into the merits of the additions/disallowances or the charging of interest under Sections 234B and 234C.