2025 (2) TMI 1228 - AT - Income Tax

ITAT upholds reassessment under Section 147 and dismissal of appeal under Section 154 with no errors found

The ITAT Chennai upheld the reopening of assessment under section 147 read with section 143(3), finding no jurisdictional defect as the assessee did not ... Reopening of assessment - percentage of rural branches which the assessee bank was having qua its claim of deduction u/s 36(1)(vii) - HELD THAT:- There is nothing to challenge the order u/s 147 r.w. 143(3) dated 12.03.2022. There is nothing on records that the issue of jurisdiction u/s 147 was raised by the assessee either before the Ld.AO during reassessment proceedings or assailed before the Ld. CIT(A). Nothing has been brought on records to allude towards jurisdictional insufficiency of the reassessment proceedings u/s 147. As far as merits of the case are concerned, there cannot be any case of grievance to the assessee because the Ld. AO did not make any additions. It is pertinent to point out that 147 action is always taken to add to or improve upon the quantum of income assessed in the original order, be it u/s 143(1) or u/s 143(3). It is thus seen that there was no case for the assessee getting aggrieved by the order of the Ld. AO, which would have warranted filing of an appeal u/s 246 before the Ld. First Appellate Authority. Action of the CIT(A) in not considering the petitions submitted by the appellant assessee u/s 154 during the course of assessment proceedings - We have noted that there is no case made out in favour of the appellant assessee to disturb the order of Ld. First Appellate Authority. The assessee had assailed the Ld. AO’s action u/s 154. CIT(A) has rightly observed that when there is no addition made in the assessment order there cannot be any scope for any amendment therein. It is settled principle of law that section 154 of the act only provides for attendance to any arithmetical or typographical errors. In the present case since there was no such error, the Ld. First Appellate Authority cannot be faulted for rejecting assessee’s appeal u/s 154. Consequently, we hold that there is no case for any interference to the order of the Ld. CIT(A) and the same is therefore sustained. All the grounds appeal raised by the assessee, through original memo, are therefore dismissed. ISSUES: Whether an assessee can contest an addition made in an original assessment order after failing to appeal against it within the statutory time limit by relying on the doctrine of merger with a subsequent reassessment order.Whether an order passed under section 147 read with section 143(3) without making any addition can be appealed against as an 'aggrieved' order under section 246.Scope and limitation of the powers of the Assessing Officer under section 147 of the Income-tax Act to reopen assessments and the nature of 'prima facie belief'.Whether a rectification request under section 154 can be used to claim additional deductions omitted in the original return but not allowed in the assessment order.Whether an appellate authority can admit a revised computation of income during assessment proceedings or only appellate authorities have such power.Whether denial of opportunity by the appellate authority was justified where notices were issued but not complied with by the assessee. RULINGS / HOLDINGS: The Court held that the addition made in the original assessment order cannot be contested belatedly by invoking the doctrine of merger with the subsequent reassessment order, as 'both the assessment orders ... are on different footings and cannot be treated as composite orders.'An order passed under section 147 read with section 143(3) without any addition or adverse impact on the assessee does not constitute an 'aggrieved' order under section 246, and hence no appeal lies against it.The Assessing Officer's power under section 147 is to bring to tax escaped income based on a 'prima facie belief' which is not a conclusive finding but requires detailed enquiry; reopening without additions or changes does not create grievance to the assessee.A rectification request under section 154 is limited to correcting 'arithmetical or typographical errors' and cannot be used to claim additional deductions or revised computations of income omitted in the original return.Following the decision in Goetze India Ltd, only appellate authorities are empowered to admit revised computations of income if made before them; the Assessing Officer cannot admit such claims during assessment proceedings.The appellate authority did not err in dismissing the appeal for non-compliance with notices and for not granting further opportunity when opportunities were duly given but not availed by the assessee. RATIONALE: The Court applied the statutory framework of the Income-tax Act, specifically sections 143(3), 147, 148, 154, 246, and 251, interpreting the scope of reopening assessments and the right to appeal only against orders causing 'aggrieved' status.The doctrine of merger was rejected as a basis to challenge a previously accepted assessment order through a later reassessment order, emphasizing the independence of assessment orders and the finality of unchallenged original orders.The Court relied on the principle that reopening under section 147 is based on 'prima facie belief' and that absence of additions or changes negates grievance, thereby precluding appeal under section 246.The limitation of section 154 to rectification of 'arithmetical or typographical errors' was reinforced, excluding its use for substantive changes in income computation.The Court endorsed the precedent set by the Hon'ble Apex Court in Goetze India Ltd, restricting admission of revised income computations to appellate authorities and not the Assessing Officer during assessment.The principle that a litigant must diligently comply with procedural requirements and avail opportunities granted was upheld, negating claims of denial of reasonable opportunity when notices were issued and hearings fixed as per adjournments sought.