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.

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