2018 (2) TMI 1918 - AT - Income Tax

ITAT affirms CIT (A), declares reassessment void ab initio for identical reasons

The ITAT dismissed the Department's appeal, affirming the Ld. CIT (A)'s findings and holding the reassessment proceedings as void ab initio based on ... Reopening of assessment u/s 147 - HELD THAT:- Relevant details were not produced before the AO during the original assessment proceedings was not borne out from the assessment records in the original assessment proceedings. CIT (A) has further noted that not only the facts/details were presented during the original assessment proceedings, but they were also considered by the AO, as was evident from the note-sheet entries. CIT (A) went on to hold that reopening on this ground was nothing but an attempt in changing the earlier opinion. CIT (A) has also taken note of the fact that for assessee’s own case for Asstt. Year 2007-08, on identical grounds, the AO had reopened the assessment and the assessee had preferred a Writ before the Hon’ble Delhi High Court wherein [2014 (12) TMI 393 - DELHI HIGH COURT] had set aside the notice and order. CIT(A) has also noted that the reasons recorded for assessment years 2006-07 and 2007-08 were identical and, therefore, the notice issued u/s 147 for reassessment proceedings was void ab initio and hence the subsequent proceedings u/s 143(3) / 148 of the Act were liable to be annulled. - we do not find any reason to differ from the findings of the CIT(A) as he as examined the issue in detail after going through the assessment records. - Decided against revenue. Issues:1. Validity of reopening assessment u/s 147 of the Income Tax Act, 1961 for assessment year 2006-07.2. Challenge to the initiation of reassessment proceedings and addition on merits.Analysis:Issue 1 - Validity of Reopening Assessment:The Department appealed against the order of the Ld. CIT (A) challenging the validity of reopening the assessment u/s 147 for the assessment year 2006-07. The original assessment was completed, and later, the case was reopened based on discrepancies in receipts and non-deduction of tax on payments. The Ld. CIT (A) held the reopening as invalid, citing that the AO had already inquired into the same issue during the original assessment proceedings, and no addition was made. The Ld. CIT (A) referred to the Hon'ble Delhi High Court judgment in a similar case for the assessment year 2007-08, where the reopening was set aside. The ITAT concurred with the Ld. CIT (A) and dismissed the appeal, noting that the notice for reassessment was void ab initio due to identical reasons recorded for assessment years 2006-07 and 2007-08.Issue 2 - Challenge to Reassessment Proceedings and Addition on Merits:The Department challenged the initiation of reassessment proceedings and the additions made on merits. The Ld. CIT (A) observed that the AO's reasons for reopening were based on discrepancies in receipts and non-deduction of tax, which were already addressed by the assessee during the original assessment. The Ld. CIT (A) found that the AO's contention of lack of disclosure of material facts was unfounded, as evidenced by the assessment records. Referring to note-sheet entries and the AO's actions during the original assessment, the Ld. CIT (A) concluded that the reassessment was an attempt to change the earlier opinion. The ITAT upheld the Ld. CIT (A)'s decision, noting the absence of factual or legal infirmity in the order and citing the precedent set by the Hon'ble Delhi High Court in a similar case for the assessment year 2007-08.In conclusion, the ITAT dismissed the Department's appeal, affirming the Ld. CIT (A)'s findings and holding the reassessment proceedings as void ab initio based on the identical reasons recorded for the assessment years 2006-07 and 2007-08.