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2012 (5) TMI 724 - AT - Income Tax

Issues involved:
Assessment order under section 143 [3] read with section 147 challenged by the assessee.

Summary:

Issue 1: Validity of reopening assessment under section 147:
The assessee filed its return of income showing a loss, which was processed under section 143 [1]. The Assessing Officer (AO) reopened the case under section 147 due to the set off of short-term capital loss against business income, which was deemed impermissible under section 71 of the Act. Additionally, an amount was disallowed under section 14A r.w. Rule 8D(1) for not offering any disallowance u/s 14 A related to exempt income. The AO completed the assessment, leading the assessee to appeal before the CIT[A]. The assessee contended that the reopening under section 147 was invalid as the return was already accepted under section 143 [1]. Despite detailed submissions, the CIT[A] upheld the assessment. The ITAT Mumbai quashed the assessment proceedings, citing that the AO's action to issue notice under section 147 without concluding proceedings under section 154 was legally flawed.

Decision:
The ITAT Mumbai allowed the appeal, emphasizing that the assessment proceedings were incomplete due to pending section 154 proceedings, rendering the notice under section 147 invalid. As a result, the assessment was quashed, and other issues from the assessment order were left undecided.

Conclusion:
The ITAT Mumbai ruled in favor of the assessee, highlighting the procedural error in reopening the assessment under section 147 without resolving the section 154 proceedings, ultimately leading to the quashing of the assessment.

 

 

 

 

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