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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -8, Chennai, dated 31.03.2016 and pertains to assessment year 2007-08.
The notice of hearing was served on the assessee by RPAD.
The Registry has placed on record the postal acknowledgement as proof of service of notice on the assessee. Inspite of receipt of notice, the assessee chose to remain absent. Therefore, we heard the Ld. Departmental Representative and proceed to dispose of the appeal on merit.
Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the Assessing Officer completed the assessment by an order dated 30.11.2010. Subsequently, the Assessing Officer found that the assessee has made belated remittance of tax deducted at source on sub-contract payment after 31.03.2007 and also there are certain unexplained expenses. Accordingly, the Assessing Officer issued notice under Section 154 of the Income- tax Act, 1961 (in short 'the Act') for rectification. Subsequently, the Assessing Officer dropped the proceedings initiated under Section 154 of the Act and issued notice under Section 148 of the Act on 26.03.2014. According to the Ld. D.R., the CIT(Appeals) found that the Assessing Officer having dropped the proceedings initiated under Section 154 of the Act, ought not to have initiated the proceedings for reopening of assessment under Section 147 of the Act. Accordingly, the CIT(Appeals) deleted the disallowance made by the Assessing Officer in reassessment proceedings. Placing reliance on the judgment of Kerala High Court in CIT v. India Sea Foods (2011) 332 ITR 424, the Ld. D.R. submitted that where rectification proceedings were initiated by the Assessing Officer under Section 154 of the Act are dropped as rectification was not permissible, the Assessing Officer can very well initiate proceedings under Section 147 of the Act to bring to tax the income escaped assessment. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer.
We have considered the submissions of the Ld. Departmental Representative and perused the relevant material available on record. From the material available on record it appears that the assessee filed return of income on 31.10.2007 admitting a total income of `57,02,237/-. Finally, the return was processed under Section 143(1) of the Act and intimation was issued on 26.09.2008. Subsequently, the Assessing Officer found that the income escaped assessment under Section 147 of the Act.
Accordingly, he reopened the assessment by issuing notice under Section 148 of the Act on 16.07.2009. The Assessing Officer has also completed the assessment after issuing notice under Section 148 of the Act on 30.11.2010. Thereafter, the Assessing Officer found that the assessee has paid the tax deducted at source belatedly after 31st March, 2007 and also there were unexplained expenses. Accordingly, he issued notice for initiating proceedings under Section 154 of the Act. During the pendency of proceedings initiated under Section 154 of the Act, the Assessing Officer has also issued notice once again under Section 148 of the Act on 26.03.2014 for reopening of assessment for second time. The CIT(Appeals) found that the reopening of assessment for second time is nothing but on change of opinion. He also placed his reliance on the judgment of Madras High Court in CIT v. E.I.D Parry Ltd. (1995) 216 ITR 489 and found that the Assessing Officer chose to initiate proceedings for rectification initially. However, he also initiated proceedings under Section 148 of the Act. Two proceedings initiated by the Assessing Officer – one under Section 154 of the Act and another under Section 147 of the Act, are overlapping each other. Therefore, the proceedings initiated by the Assessing Officer for reopening of assessment cannot stand in the eye of law. The CIT(Appeals) has also referred to the judgment of Gujarat High Court in Damodar H. Shah v. ACIT (2000) 245 ITR
Accordingly, the CIT(Appeals) found that initiation of reassessment proceedings consequent to initiation of rectification proceedings are not in accordance with law. Accordingly, he deleted the disallowance made by the Assessing Officer. This Tribunal is of the considered opinion that the CIT(Appeals) has rightly placed his reliance on the judgment of jurisdictional High Court in E.I.D Parry Ltd. (supra), therefore, there is no reason to interfere with the order of the lower authority and accordingly, the same is confirmed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 25th November, 2016 at Chennai.