2023 (8) TMI 1059 - AT - Income Tax

Invalid Reopening of Assessment under Income-tax Act; Tribunal Quashes Order

M/s. Carborundum Universal Limited Versus The Assistant Commissioner of Income-tax, Large Taxpayer Unit-1, Chennai.

The Tribunal held that the reopening of assessment under section 147 of the Income-tax Act was invalid as the issue was already subject to appeal, thus ... Reopening of assessment u/s 147 - disallowance u/s. 14A r.w.r. 8D - HELD THAT:- In the present case, if you go by reasons recorded for re-opening of assessment, the assessment has been reopened to assess income chargeable to tax had been escaped assessment on account of computation of disallowance u/s. 14A r.w.r. 8D and said issue was subject matter of appeal before the CIT(A). The issue of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 was travelled up to Tribunal and [2021 (3) TMI 1429 - ITAT CHENNAI] has remanded the issue back to the file of the Assessing Officer for denovo consideration of disallowance u/s. 14A r.w.r. 8D, thus it is very clear that the issue on which the assessment has been re-opened was subject matter of appeal and thus, in our considered view as per 3rd proviso to section 147 re-opening of assessment and consequent assessment order passed by the Assessing Officer is bad in law and liable to be quashed. Decided in favour of assessee. Issues Involved:The issues involved in this case are the validity of the reopening of assessment under section 147 of the Income-tax Act, 1961 and the consequent reassessment order passed by the Assessing Officer.Summary of the judgment:Issue 1: Validity of reopening of assessment under section 147:The appellant challenged the reopening of assessment under section 147 on the grounds that the issue of disallowance under section 14A was already subject to appeal before the first appellate authority. The Tribunal noted that the issue of disallowance under section 14A was indeed the subject matter of appeal and had been remanded back to the Assessing Officer for reconsideration. As per the 3rd proviso to section 147 of the Act, there is no scope for reopening an assessment on an issue that is the subject matter of an appeal. Therefore, the Tribunal held that the reopening of assessment and the consequent reassessment order were bad in law and quashed the reassessment order.Issue 2: Consequent reassessment order:The Assessing Officer had passed an exparte assessment order under section 144 r.w.s. 147 of the Act, assessing the total income without making any addition towards disallowance under section 14A. The appellant contended that this assessment order should be set aside due to the invalidity of the reopening of assessment. The Tribunal, in line with its decision on the first issue, quashed the reassessment order passed by the Assessing Officer under section 144 r.w.s. 147 of the Act.In conclusion, the Tribunal allowed the appeal filed by the assessee, pronouncing the order on 19th July, 2023 at Chennai.