2014 (6) TMI 633 - AT - Income Tax

Tribunal quashes assessment reopening, deems it void ab-initio. AO's action deemed unjustified.

The Tribunal allowed the assessee's appeal, holding that the reopening of the assessment was not proper. The order passed by the AO was quashed as void ... Validity of reopening of the assessment u/s 147 of the Act – Mere change of opinion - Held that:- No addition was made thereby the expenses were treated as revenue expenses – Reopening of the assessment was not justified - assessment can be re-opened even in cases where there has been complete disclosure of all the relevant facts necessary for assessment and the words ''escaped assessment' are apt to cover the case of discovery of a mistake in the assessment caused by either an erroneous construction of the transaction or due to its-non-consideration or caused by a mistake of law applicable to such transfer or transaction - the AO has specifically asked for the details and the assessee has submitted the details of payments and only thereafter the assessment has been completed - the CIT(A) concluded that the AO consciously applied his mind in the original assessment and that was the reason for quashing the reassessment. The assessee had furnished information about the payment before the AO and considers that after conscious application of mind, the AO has accepted the claim - it cannot be stated that it was not a conscious decision of the AO to allow claim of the AO to allow the claim of the assessee - also in Jindal Photo Films Ltd. Vs. DCIT [1998 (5) TMI 20 - DELHI High Court] it has been held that a claim has been considered in the original assessment without any further material on record, it cannot be reopened and it would amount to change of opinion, which is not permissible even after the amendment and the case falls within the four years’ time limit - reopening was not proper and quash the same - the reopening does not seem to be justified – thus, the reopening of the assessment was not proper and the order passed by AO is set aside – Decided in favour of Assessee. Issues:Reopening of assessment u/s. 147 of the Act.Analysis:The assessee filed a return of income declaring total income. The assessment was completed under section 143(3) on a certain date. Subsequently, a notice u/s. 148 was issued, and the assessee objected to the reopening of the assessment. The reasons for reopening were provided, and objections were raised by the assessee. The CIT(A) confirmed the AO's action, leading to an appeal by the assessee. The assessee contended that the reopening was based on a mere change of opinion, which is impermissible under the law. The AO raised queries during the assessment proceedings, to which the assessee responded, and no addition was made. The Tribunal relied on a previous decision where a similar reopening was held invalid, emphasizing that the AO had consciously applied his mind during the original assessment. Consequently, the Tribunal found the reopening in this case unjustified and quashed the order, declaring it void ab-initio. Grounds 1 & 2 of the appeal were allowed.Other Grounds:The Tribunal did not adjudicate on the other grounds raised by the assessee, as the primary issue of reopening the assessment was resolved in favor of the assessee. Therefore, the other grounds did not require separate consideration.Conclusion:The Tribunal allowed the assessee's appeal, holding that the reopening of the assessment was not proper, and the order passed by the AO was quashed as void ab-initio. The decision was pronounced in open court, and the appeal was allowed based on the findings related to the reopening issue.