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2016 (6) TMI 971 - ITAT MUMBAI

2016 (6) TMI 971 - ITAT MUMBAI - TMI - Validity of reassessment proceedings - Held that:- No fresh material or information was referred to by the AO in the reasons recorded for re-opening the assessment, that the material referred to was the same, that the reasons arose from the perusal of the existing assessment record. Thus the order passed by the AO for re-opening the assessment for the year under appeal was invalid. Therefore, consequential order passed has to be treated an invalid order. - .....

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e at Nil . The assessment order u/s. 143(3) r. w. s. 147 of the Act, was passed on 3. 12. 2008, determining the total income of the assessee at ₹ 58, 53, 770/-. 2. First Ground of appeal deals with validity of reassessment proceedings. We find that the AO had reopened the case after recording the reasons. The reasons recorded by him read as under: (i) During the F. Y. 1999-2000 (A. Y. 2000-01) all the shares of the company were acquired by M/s. TELCO Ltd. Consequent to this, the persons be .....

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ement of income. (ii) A perusal of the record reveals that the assessee has not carried out business activity throughout the year and the premises owned by the company were utilized for the business of servicing and maintenance of vehicles. During the previous year relevant ot AY 2003-04, the assessee had received rental income of ₹ 81, 09, 000/- and other income of ₹ 1, 77, 468/-. Though the total income including income from house property was determined during the assessment at &# .....

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wever, he held that notice u/s. 148 of the Act was issued as per the provisions of the Act. Before the First Appellate Authority (FAA), it was contended that original assessment was made u/s. 143(3) of the Act, that set off of brought forward losses had already been allowed, that the income was computed at Nil and was assessed at book profit u/s. 115JB of the Act, it was merely change of opinion. After considering the submission of the assessee and assessment order the FAA held that in the case .....

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he assessee had supplied all the necessary details and AO had arrived at a particular conclusion, that in para 2 of the reasons the AO had mentioned that total income was determined at ₹ 58. 53 lakhs, that finding given by AO was factually incorrect, that there was no escapement of income for the year under consideration, that reopening was based on very same records available on the file of AO, that there was no new or fresh material for forming the belief of escapement of income. He refe .....

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rused the material before us. We find that in the reasons recorded, the AO had mentioned that perusal of the record revealed ………. . The note clearly shows that the AO had re-appraised the facts available on record and no new material had been considered before issuing the notice u/s. 148 of the Act. We find that vide his letter dated 24. 11. 2005, the assessee had mentioned that the premises of the company were to be utilised for undertaking business of servicing/maintaining .....

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g anywhere. In short, the AO had reopened the assessment with regard to issues which are already dealt with during the regular assessment proceedings. After the completion of 143(3) proceedings, he formed different opinion about the treatment to be given to the two items. Thus, it was a pure case of change of opinion. We find that the FAA had mentioned that there were mistakes in the original assessment order. In our opinion, if there were mistakes, other remedies were available to the AO. To re .....

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inal assessment proceedings. So, there was no justification in re-opening the matter. Here, we would like to refer to the case of Central Warehousing Corporation Ltd. (382 ITR 172). In that matter the Hon ble Delhi High Court has dealt the similar issue. Fact of the case were that for the AY. 2004-05, the reopening of assessment was sought to be made on the basis that the assessee had claimed exemption in respect of its dividend and the proportionate management and administrative expenses attrib .....

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was completed under section 143(3)of the Income-tax Act, 1961. The Assessing Officer subsequently reopened the assessment on the ground that he had inadvertently failed to notice that income of the assessee from the disposal of stocks in the bonded warehouse had escaped assessment. The Tribunal held that the reopening of the assessment was invalid…. the original assessment was framed under section 143(3) of the Act and while framing original assessment, a specific query was raised by the .....

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ng Officer specifically raising a query why the proportionate administrative and management expenses incurred for earning the exempted income should not be disallowed under section 14A . The assessee had replied to the questionnaire and the reply had been taken into account. Thus the Assessing Officer by seeking to reopen the assessment, was reviewing his earlier order. Therefore, the reopening of the assessment was not valid. We would also like to refer to the matter of Turner Broadcasting Syst .....

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to the mutual agreement to avoid double taxation under article 27 of Double Taxation Avoidance Agreement between India and the U. S. A, for the AY. s. 2001-02 to 2004-05 and the fact that subsequently for the AY. 2005-06, assessment was concluded following the mutual agreement procedure. The AO in the assessment order had specifically recorded that since the facts of the year under consideration remained the same, following the agreement reached by the respective competent authorities in the ear .....

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and then a change thereof. In the context of section 147 of the Income-tax Act, 1961, it implies that the Assessing Officer should have formed an opinion at the first instance, i. e. , in the proceedings under section 143(3) and by initiation of the reassessment proceedings, the Assessing Officer proposes or wants to take a different view ; (ii) reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and was decided in favour of the assesse .....

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