2017 (11) TMI 681 - HC - Income Tax

Court upholds Tribunal decision on assessment year 2006-07 reopening, citing external pressure.

PR. Commissioner of Income Tax-Vadodara-1 Versus Bell Granito Ceramics Ltd.

PR. Commissioner of Income Tax-Vadodara-1 Versus Bell Granito Ceramics Ltd. - Tmi Issues:Validity of reopening of assessment based on audit objection.Analysis:1. The main issue in this case is the validity of the reopening of assessment of the respondent assessee for the assessment year 2006-07. The Revenue argues that the notice for reopening was issued within the prescribed period and after recording proper reasons, making it valid. However, the Tribunal set aside the reopening, noting that it was prompted by an audit objection. The Tribunal observed a note by the Assessing Officer stating that the assessment was completed due to the audit objection raised by the Revenue Audit Party.2. To gather correct facts, the court requested the original assessment file. The file contained documents showing that the Assessing Officer was compelled by the audit party to reopen the assessment. An audit note dated 24.06.2010 highlighted that the assessee had incurred certain expenses, but only a portion was added back by the Assessing Officer. Despite the officer's disagreement with the audit objection, he eventually issued a notice for reopening based solely on this discrepancy. Further correspondence reiterated the officer's stance against the audit objection.3. The court observed that the Assessing Officer had been acting under compulsion from the audit party, despite his disagreement with their viewpoint. It was evident that from reassessment to the reopening of assessment, the officer had been acting mechanically, likely due to external pressure.4. Ultimately, the court found no error in the Tribunal's decision. The Tax Appeal was dismissed, upholding the Tribunal's view on the validity of the reopening of assessment based on an audit objection.