Kolkata bench(A) of The Income Tax Appellate Tribunal in an appeal filed by revenue against the order of Ld. CIT (Appeals) which cancelled the assessment made by AO under Section 143(3) and 147 of the Income Tax Act, 1961 considered whether the re-assessment made by A.O. was valid or not.
In the instant case, the assessee is a partnership firm engaged in the business of trading on oil. The return for the year under consideration was filed by the company declaring a total income of Rs. 59,190/-. But during the assessment originally completed under Section 143(3), the total income of the assessee was determined by the A.O at Rs. 87,950/- .In the said determination, there was some mistake and it was rectified by the A.O reducing the total income to Rs. 82,950/-. Thereafter, on noting some difference in sales figure shown by the assessee, the AO reopened the assessment and issued a notice under Section 148. In return to the notice, the assessee filed return as to be the same as filed before. Thereafter, another assessment was completed by the A.O. Against the said order passed by the A.O, an appeal was preferred by the assessee before the Ld. CIT(A) which annulled the assessment made by the A.O stating that the reopening of already completed assessment was a subject matter of numerous litigations which are against the rulings of the apex court in CIT v. Tarajan Tea Co. [P] Ltd. and ITO v. Nawab Mir Barkat Ali Khan Bahadur (1974) that primary information which was available with the A.O. during the course of a scrutiny assessment proceeding cannot be used to reopen the assessment.
The Ld.CIT(A) held that the action of the A.O. in reopening the assessment does not fall within the legal framework of the scheme of reassessment proceedings and held the order to be an ‘ultra vires order’. Aggrieved by the said order of the Ld.CIT(A), the revenue had preferred the instant appeal.
Dismissing the appeal, the ITAT held that on perusal of the reasons recorded by the A.O., shows that the assessment originally completed under Section 143(3) was reopened on the basis of same sets of facts and materials which were available with them at the time of completion of original assessment. It relied on various judicial pronouncements including the decision of full bench of Delhi high court in CIT v. Kelvinator of India Ltd. which held that “ when the assessment is completed under Section 143(3) there is a presumption that all the issues relevant to the assessment have been considered and concluded by the A.O. by applying his mind.” It was further held that even if there is any mistake committed by the A.O. while completing his assessment, the same cannot be allowed to be taken as basis for reopening of the said assessment. The ITAT also opined that in the instant case reopening of assessment by the A.O. was bad in law and the same was based on mere change of opinion without any new tangible material.
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