2018 (5) TMI 1691 - AT - Income Tax

Tribunal quashes assessment proceedings under Income Tax Act citing precedent

DCIT, Circle – 1 (1) (1), Ahmedabad Versus M/s. Asian Tiles Ltd.

The Tribunal upheld the Commissioner's decision to quash the assessment proceedings under section 147 of the Income Tax Act for the Assessment Year ... Reopening of the assessment u/s 147 - suppression of sales - Held that:- Entire sale transaction cannot be taken as income - judgment of Hon’ble Gujarat High Court in the case of Asian Tiles Ltd. [2015 (7) TMI 1281 - GUJARAT HIGH COURT] is squarely applicable to the case on hand - respondent could not have issued impugned notice to the petitioner subject to suppressed sale transaction to income - thus the notice is inherently illegal and invalid - hence assessment order u/s 147 is quashed - Decided in favor of assessee. Issues Involved:1. Validity of reopening of assessment under section 147 of the Income Tax Act.2. Decision on merits of the grounds raised by the Revenue.3. Applicability of judgment quashing similar assessment proceedings for a different assessment year.4. Sustainability of proceedings initiated under section 147 of the Act.5. Adjudication of the issue on merit.Analysis:1. The appeal was filed by the Revenue against the Commissioner of Income Tax(Appeals) order, challenging the reopening of assessment under section 147 of the Income Tax Act for the Assessment Year 2006-07. The Revenue contended that the proceedings initiated under section 147 were valid and should not have been quashed by the Commissioner.2. The Revenue raised grounds of appeal related to the legality of the reopening of the assessment and the failure of the Commissioner to decide on the merits of the case. The issue revolved around whether the Commissioner erred in quashing the order reopening the assessment under section 147 of the Act and not providing a decision on the substantive issues.3. The interconnected issue arose from the similarity of facts between the present case and a previous assessment year (2007-08) where similar proceedings were initiated under section 147. The appellant argued that since the Gujarat High Court had quashed the reopening of assessment for the previous year, the same should apply to the current assessment year as well.4. The Commissioner, after considering the submissions of the appellant, quashed the assessment proceedings under section 147. The Commissioner relied on the decision of the Gujarat High Court in a similar case for the assessment year 2007-08, where the Court held that the entire suppressed sale transaction could not be treated as income.5. The Tribunal, in its judgment, upheld the decision of the Commissioner based on the precedent set by the Gujarat High Court. The Tribunal found that the facts for the current assessment year were identical to the previous year where the assessment proceedings were quashed. Therefore, the Tribunal concluded that the proceedings initiated under section 147 were not sustainable in the eyes of the law.6. As a result of quashing the assessment order under section 147, the Tribunal refrained from adjudicating the issue on merit. The appeal of the Revenue was dismissed based on the finding that the proceedings initiated under section 147 were not valid, and therefore, there was no need to delve into the substantive merits of the case.This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, the legal reasoning applied by the Commissioner and the Tribunal, and the final decision reached in the case.