Kolkata bench of Income Tax Appellate Tribunal (ITAT) recently held that the Assessing Officer (AO) does not have any power to review his own order which has already been passed by him by invoking Section 147 of the Income Tax Act 1961.
Assessee in the present case is a is a corporate body engaged in the business of infrastructure development and also having a small scale industry in the North Eastern Region of India has duly filed its return of income for the relevant assessment year and claimed deductions under section 80IA and 80IC of the Income Tax Act 1961, by holding that since the assessee company was in the business of infrastructural development and having a small scale industry in the North East Region, it is eligible to claim deductions under the said sections for its business of infrastructure, development and manufacturing respectively.
During the assessment period the AO has completed the assessment under section 143(3) of the act and after partially allowing the claim of the assessee under section 80IA of the act and declared its total income at Rs.4,99,876. And the AO totally denied the assessee’s claim of deduction under section80IC of the Act. He was of the view that the assessee company is engaged in the business of constructing roads, highways, bridges and railway tracks etc. on contract with various State Govt., Railways, and BRTF etc.
And further he noted that during the year, the assessee company had undertaken various civil works in Railways, State Govt. and other local authorities on contract basis. Therefor he confirmed that Assessee Company was not involved in any developing, maintaining and operating any infrastructure project and had merely executed the contract work and, therefore, is ineligible to claim deduction u/s. 80IA of the Act. Consequently the AO has re-opened the assessment order in respect to section 80IA of the Act claimed by the assessee is that assessee is merely a works contractor and not a developer and, therefore, not eligible for deduction under 80IA of the Act.
After considering the rival submissions of both the parties the tribunal bench comprising of Judicial Member Aby. T. Varkey and Accountant Member M. Balaganesh observed that the assessee in its computation sheet produced before the AO during original assessment has clearly shown that the total income of Rs.286,71,025 as profit from contract and claimed depreciation, therefor it cannot be considered the case where the assessee had misled the AO in any manner while making the claim under section 80IA of the Act.
The bench further held that the action of the AO to reopen an assessment completed earlier under section 143(3) of the Act without any tangible material ought not to have been done and the AO made the re-assessment only on the basis of the same material facts which were the assessee submitted before him at the time original assessment proceedings.
While allowing the claim on deductions of the assessee under the aforementioned section the division bench declared that AO does not has any right to review his own order.