The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that revisional power under Section 263 of the Income Tax Act, 1961 could not be used to reopen the assessment proceedings.
Section 263 of the Income Tax Act states that if the assessment proceedings made by the assessing officer is erroneous and prejudicial to the interest of revenue, the PCIT/CIT has the power to revise the proceedings.
Assessee State Bank of India had filed return of income on 29.09.2008 declaring total income of about 350 crore Rupees. Subsequently, the assessee filed a revised return of income on 11.11.2009.
Thereafter, the case of the assessee was selected for scrutiny and assessment was completed under Section 143(3) of the Income Tax Act on 28.12.2010.
By impugned action, the AO had issued notice under Section 148 of the Act on 30.03.2015 proposing re-opening of the assessment for AY 2008-09. Against the action assessee filed appeal before the CIT(A).
Ketan Ved counsel for the assessee submitted that “since four years have elapsed, the AO can re-open the assessment only if there was a tangible material which has come to the possession of the AO to show that due to the failure on the part of the assessee the true and correct facts could not be disclosed during the earlier assessment completed under Section 143(3) of the Income Tax Act.”
Nilu Jaggi counsel for the revenue submitted that there is a reason to believe escape of income for reopening the assessmnet. Further, assessee failed to disclose fully and truly all material facts necessary for assessee’s assessment.
During the proceedings, the tribunal observed that, “Reasons recorded by AO in the instant case reveals that there was no new tangible material to reopen the assessment for Assessment year 2008-09 which has already undergone scrutiny assessment under section 143(3) of the Income Tax Act dated 28.12.2010.“
It was said that ”Once the assessee’s return of income has already undergone scrutiny assessment under Section 143(3) of the Income Tax Act and four years has elapsed, then AO has to specify/spell out the relevant fact which has not been disclosed by the assessee during the original assessment/return of income/balance-sheet/profit and loss account/tax audit report. Failure of the AO, not to specify it vitiates the reasons recorded”.
Further, the AO while framing the assessment under Section 143(3) of the Income Tax Act dated 28.12.2010 has taken into consideration the revised return of income filed by assessee.
Therefore, the tribunal of Aby T Varkey, Judicial Member and OM Prakash Kant, Accountant Member held that, “Even if there is any error/mistake on the part of the predecessor AO while doing so, it cannot give power to the present AO to review the action of the earlier AO. This power is vested only with the PCIT/ CIT under Section 263 of the Income Tax Act and cannot be used to reopen the assessment”
Therefore the bench allowed the appeal filed by the assessee .
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