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2016 (4) TMI 167 - HC - Income TaxReopening of assessment - Held that:- Apart from the mistake made in the audit report by mentioning the system of accounting of the Assessee as ‘mixed’ and the letter issued by the Assessee himself, no other ‘tangible material’ was cited to justify the reopening of assessment for AY 2006-07 and 2007-08, the two years for which the reopening was beyond the period of four years. The reasons provided were the same reasons supplied for the reopening of the assessment for AYs 2008-09 and 2009-10 although for AY 2008-09 the earlier assessment was completed under Section 143 (1) of the Act. The fact of the matter was that the reason for the reopening of the assessment was a mistaken factual premise that the Assessee had changed the system of accounting from the mercantile to the cash system. It was more than adequately explained by the Assessee that this was an inadvertent error. The Assessee has convincingly shown that he has consistently been following the mercantile system of accounting not only for AYs in question but for the earlier and later AYs as well. Since the action of the Revenue was based on a factually erroneous premise, the Court is of the view that the reopening of the assessments for the said AYs is not sustainable in law. Decided in favour of assessee
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