2017 (5) TMI 1098 - AT - Income Tax

Tribunal invalidates reassessment for failure to pass speaking order. Reopening reasons didn't align. Income below threshold.

Dr. K. Sridhara Versus The Assistant Commissioner of Income Tax, Chennai

The Tribunal found the reassessment proceedings and the reassessment itself invalid due to the Assessing Officer's failure to pass a speaking order ... Reopening of assessment - Held that:- It is clear that once four years have gone by, a reopening notice can be sent only if income which has escaped assessment is more or likely to be more than C1,00,000/-. That apart, assessee’s objection to the reasons given for re-opening were never disposed of by ld. Assessing Officer, prior to completing the assessment. The judgment of Hon’ble Apex in the case of Rajesh Jhaveri Stock Brokers P. Ltd, (2007 (5) TMI 197 - SUPREME Court) is of little help to the Revenue when reopening is time barred and objection to reasons given for reopening were not dealt prior to completion of the assessment. Have no hesitation to hold the reassessment proceedings as well the reassessment as invalid and bad in the eyes of law. It stands set aside. - Decided in favour of assessee. Issues Involved:Challenge to reopening of assessment for the impugned assessment year.Analysis:1. The appellant challenged the reopening of the assessment for the impugned assessment year on grounds 2 to 5. The original assessment was completed under section 143(1) of the Act. The appellant, a salaried employee, claimed interest payable on a housing loan for a self-occupied property. The Assessing Officer issued a notice for reopening, citing reasons related to the housing loan interest claim. The appellant contended that the reassessment proceedings were invalid as the Assessing Officer did not pass a speaking order disposing of the objections before completing the assessment, as required by legal precedents. The reasons for reopening did not align with the actual disallowance made during the assessment, rendering the reassessment invalid.2. The Departmental Representative argued that objections to the reasons for reopening were addressed in the assessment order and that the disallowance made was consistent with the reasons provided. It was contended that the original assessment under section 143(1) was merely a processing step, and the reopening was valid based on legal precedents.3. Upon considering the contentions from both sides, the Tribunal analyzed the housing loan interest claimed by the appellant and the reasons for reopening provided by the Assessing Officer. The Tribunal noted that the reopening notice was issued after four years from the end of the relevant assessment year, and the income which had escaped assessment was less than the threshold amount specified by the law. The Tribunal emphasized the importance of disposing of objections before completing the assessment, as highlighted in legal judgments. Citing relevant case law, the Tribunal concluded that the reassessment proceedings and the reassessment itself were invalid and set aside.4. As the appellant succeeded on the question of jurisdiction, the Tribunal did not adjudicate on other grounds raised in the appeal. Consequently, the appeal of the assessee was allowed, and the order was pronounced on the specified date at Chennai.