TAMILNADU URBAN FINANCE & INFRASTRUCTURE DEVELOPMENT CORPORATION,CHENNAI vs. ACIT, CHENNAI

Both the appeals of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals)-11, Chennai, dated 26.02.2015 and pertain to assessment years 2006- 07 and 2007-08. We heard both the appeals together and disposing of the same by this common order.

Let’s first take the assessee’s appeal for assessment year 2006-07 in I.T.A. No.1315/Mds/2015.

Shri G. Baskar, the Ld.counsel for the assessee, submitted that the Assessing Officer reopened the assessment for making disallowance under Section 36(1)(vii) of the Income-tax Act, 1961 (in short 'the Act') on the basis of material already available on record, after expiry of four years from the end of relevant assessment year. Referring to the original assessment order, the Ld.counsel submitted that the assessee has furnished all the information relating to reserve made under Section 36(1)(viii) of the Act and the claim was made by the assessee under Section 36(1)(viii) of the Act. According to the Ld. counsel, the Assessing Officer after considering the entire claim, allowed the deduction under Section 36(1)(viii) of the Act. The Ld.counsel further submitted that the Assessing Officer cannot reopen the assessment unless there was negligence on the part of the assessee in furnishing the material required for computing the assessment. In this case, according to the Ld. counsel, there is not even whisper that the assessee failed to furnish any information. Moreover, on the basis of the material filed by the assessee at the time of original assessment, the Assessing Officer reopened the assessment. At the best, according to the Ld. counsel, it may be negligence on the part of the Assessing Officer for not considering the material filed by the assessee, therefore, reopening of assessment, after expiry of four years from the end of the relevant assessment year, is not justified.

On the contrary, Shri Arun C. Bharat, the Ld. Departmental Representative, submitted that the Assessing Officer found that the assessee claimed deduction of `16,75,72,169/- under Section 36(1)(viii) of the Act. The Assessing Officer restricted the claim to `5,05,10,900/- while passing order under Section 143(3) of the Act.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that on the basis of material available on record at the time of original assessment, the Assessing Officer found that the assessee is eligible for allowance of `4,43,21,439/- as against allowance of `5,05,10,900/-. No fresh material was brought on record by the Assessing Officer. We have carefully gone through the proviso to Section 147 of the Act. This proviso clearly says that unless there is negligence on the part of the assessee in furnishing material required for completing the assessment, the Assessing Officer cannot reopen the assessment after expiry of four years from the end of relevant assessment year. In this case, the original assessment was completed under Section 143(3) of the Act. Therefore, this Tribunal is of the considered opinion that in the absence of any material to indicate that there was negligence on the part of the assessee, the Assessing Officer is not justified in reopening the assessment. As rightly submitted by the Ld.counsel for the assessee, there is not even a whisper that the assessee has failed to furnish any of the required particulars for completing the assessment. In those material facts, this Tribunal is of the considered opinion that reopening of assessment under Section 147 of the Act is not justified and the order passed by the Assessing Officer cannot stand in the eye of law. Accordingly, the orders of the authorities below are set aside and the assessment reopened under Section 147 of the Act is quashed.

Coming to the assessee’s appeal for assessment year 2007- 08 in the assessee claimed that for this assessment year also, the assessment was reopened after expiry of four years from the end of the relevant assessment year. However, the assessee had not raised this issue before the CIT(Appeals). In fact, it was raised first time before this Tribunal. Therefore, the Ld. Departmental Representative submitted that an opportunity may be given to the CIT(Appeals). The Ld.counsel for the assessee also fairly submitted that the matter may be remitted back to the file of the CIT(Appeals) to consider the issue of reopening, since the issue of reopening of assessment has not been raised before the CIT(Appeals).

The issue of reopening of assessment under Section 147 of the Act goes to the root of the matter. In fact, this goes to the jurisdiction of Assessing Officer for making reassessment. Therefore, the same has to be disposed of at the first instance. As rightly submitted by the Ld.counsel for the assessee and the Ld. Departmental Representative, this issue was not considered by this CIT(Appeals) and it was raised first time before this Tribunal. Therefore, this Tribunal is of the considered opinion that the matter needs to be considered by the CIT(Appeals) at the first instance. Accordingly, the orders of both the authorities below for assessment year 2007-08 are set aside and the issue of reopening of assessment is remitted back to the file of the Assessing Officer. The CIT(Appeals) shall consider the issue of reopening after giving a reasonable opportunity to the assessee. The CIT(Appeals) shall reconsider the issues on merit once again.

In the result, the appeal of the assessee for assessment year 2006-07 in is allowed. However, for the assessment year 2007-08 in I.T.A. No.1316/Mds/2015 is allowed for statistical purposes.