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Tribunal voids reassessment for lack of failure mention, grants relief on jurisdictional ground, refrains from merits opinion. The Tribunal quashed the reassessment proceedings as void ab initio due to the absence of mentioning the failure on the part of the assessee in the ...
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Tribunal voids reassessment for lack of failure mention, grants relief on jurisdictional ground, refrains from merits opinion.
The Tribunal quashed the reassessment proceedings as void ab initio due to the absence of mentioning the failure on the part of the assessee in the reasons recorded by the ld. AO, following the High Court decision. The relief was granted to the assessee on the preliminary ground of invalid assumption of jurisdiction u/s.147 of the Act. Consequently, the appeal was allowed, and the Tribunal refrained from giving an opinion on the merits, leaving them open for future consideration.
Issues involved: Challenge to the validity of assumption of jurisdiction under section 147 of the Income Tax Act, 1961.
Analysis: The appeal in ITA No.6105/Mum/2018 for A.Y.2007-08 was against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961. The assessee, a partnership firm trading in diamonds, challenged the validity of the reopening of assessment. The original assessment for A.Y.2007-08 was completed earlier, and the reassessment was initiated beyond four years from the end of the relevant assessment year. The reasons recorded by the ld. AO for reopening did not mention any failure on the part of the assessee to disclose fully and truly all material facts relevant for assessment, as required by the proviso to Section 147 of the Act. The decision of the Hon'ble Jurisdictional High Court highlighted the importance of reasons being clear, unambiguous, and based on evidence. It emphasized that the ld. AO must establish a vital link between the reasons and evidence to prevent arbitrary reopening of concluded assessments.
The Tribunal, following the High Court decision, quashed the entire reassessment proceedings as void ab initio due to the absence of mentioning the failure on the part of the assessee in the reasons recorded by the ld. AO. The relief was granted to the assessee on the preliminary ground of invalid assumption of jurisdiction u/s.147 of the Act. As a result, the appeal of the assessee was allowed, and the Tribunal refrained from giving an opinion on the grounds raised on merits, leaving them open for future consideration.
The judgment was pronounced on 11/06/2021, emphasizing the importance of reasons for reopening assessments being clear, unambiguous, and based on evidence to prevent arbitrary actions by the assessing officer.
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