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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आदेश /O R D E R
PER MANJUNATHA. G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 22.12.2022 and pertains to assessment year 2015-16.
:-2-: ITA. No: 220/Chny/2023 2. The assessee has raised the following grounds of appeal: “1. Order of the NFAC / Commissioner of lncometax (Appeals) is contrary· to law, facts and in the circumstances of the case. 2. The NFAC/ Commissioner of income tax (Appeals) erred in not cancelling the reopening and setting aside the reassessment order in toto. 3. The NFAC / Commissioner of Income tax (Appeals) ought to have appreciated that the assessment was reopened only for the purpose of determining the disallowance under section 14A. 4. In the order of the reassessment the Assessing officer has not made any addition to the original income determined. Hence the CIT(A) should have cancelled the reopening and set aside the order of reassessment. 5 The NFAC/ CIT(A) ought to have appreciated that the original order of assessment u/s 143(3) was subject matter of appeal before the ITAT and the ITAT had set aside certain issues to the Assessing Officer for reconsideration. The correct income will have to be decided after giving effect to the order of the IT AT. 6. Consequently, the income determined in the order of reassessment of Rs. 211,66, 73,558/-cannot stand and has to be set aside to await the correct determination of income after giving effect to the order of the ITAT. 7 The Appellant craves leave to adduce additional grounds at the time of hearing.”
The brief facts of the case are that, the assessment has been completed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) on 30.12.2017 and determined total income of Rs. 211,66,73,558/-, by making various additions including addition towards disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 etc. The assessee challenged
:-3-: ITA. No: 220/Chny/2023 the assessment order passed by the Assessing Officer before the first appellate authority and the ld. CIT(A) vide their order dated 23.07.2018 partly allowed appeal filed by the assessee. The assessee carried the matter in appeal before the tribunal and challenged various additions made by the Assessing Officer including addition towards disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962. The ITAT, Chennai Benches vide order dated 31.03.2021 in ITA No. 2803/Chny/2018, set aside the issue of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 to the file of the Assessing Officer, in light of arguments of the assessee and to decide the issue in accordance with law.
The case has been subsequently re-opened u/s. 147 of the Act for the reasons recorded, as per which income chargeable to tax had been escaped assessment on account of computation of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962. Therefore, notice u/s. 148, dated 24.03.2020 was issued and served on the assessee. In response, the assessee neither filed any return of income nor submitted details in respect of computation of disallowance u/s. 14A of the Act. Therefore, the Assessing Officer passed exparte assessment order u/s. 144 r.w.s. 147 of the Act on 21.09.2021 and
:-4-: ITA. No: 220/Chny/2023 assessed total income at Rs. 211,66,73,558/-, without there being any addition towards disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962. The assessee carried the matter in appeal before the first appellate authority and the ld. CIT(A), NFAC, Delhi, vide order dated 22.12.2022, partly allowed appeal filed by the assessee. Aggrieved by the CIT(A) order, the assessee is in appeal before us.
The Ld. Counsel for the assessee, submits that re- opening of assessment u/s. 147 of the Act is bad in law and liable to be quashed, because the Assessing Officer has re- opened the assessment on the ground that income chargeable to tax had been escaped on account of short-assessment of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962, but fact remains that the issue of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 was subject matter of appeal before the first appellate authority and thus, when the assessment has been re-opened, the issue of disallowance u/s. 14A was subject matter on appeal before the CIT(A) and thus, as per proviso to section 147 of the Act, there is no scope for reassessment of the income involving matters, which are the subject matter of any appeal, reference or revision before the appellate
:-5-: ITA. No: 220/Chny/2023 authority. Since, the issue of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 was subject matter on appeal and finally the Tribunal has set aside the issue to the file of the Assessing Officer for reconsidering, the re-opening of assessment on very same issue is bad in law and liable to be quashed.
The ld. CIT-DR, Shri. R. Mohan Reddy, supporting the order of the CIT(A) submits that, the assessee neither appeared before the Assessing Officer nor filed any details to explain the case and further the assessee has not argued this issue before the CIT(A). Therefore, there is no merit in arguments of the assessee that re-opening of assessment is bad in law and hence, the grounds of appeal filed by the assessee should be rejected.
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. As per provisions of 3rd proviso to section 147 of the Act, the Assessing Officer may assessee or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. In other
:-6-: ITA. No: 220/Chny/2023 words, there is no scope for re-opening of assessment on any issue which is subject matter of any appeal before the appellate authority. In the present case, if you go by reasons recorded for re-opening of assessment, the assessment has been reopened to assess income chargeable to tax had been escaped assessment on account of computation of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 and said issue was subject matter of appeal before the CIT(A). Further, the issue of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 was travelled up to Tribunal and Tribunal vide order dated 31.03.2021 in ITA No. 2803/Chny/2018 has remanded the issue back to the file of the Assessing Officer for denovo consideration of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962. Therefore, from the above, it is very clear that the issue on which the assessment has been re-opened was subject matter of appeal and thus, in our considered view as per 3rd proviso to section 147 of the Act, re-opening of assessment and consequent assessment order passed by the Assessing Officer is bad in law and liable to be quashed. Thus, we quash reassessment order passed by the Assessing Officer u/s. 144 r.w.s. 147 of the Act dated 21.09.2021.
:-7-: ITA. No: 220/Chny/2023 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the court on 19th July, 2023 at Chennai. Sd/- Sd/- (वी दुगा� राव) (मंजुनाथ. जी) (V. DURGA RAO) (MANJUNATHA. G) �याियकसद�य/Judicial Member लेखासद�य/Accountant Member चे�ई/Chennai, �दनांक/Dated: 19th July, 2023 JPV आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�/CIT 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF