M/S. VADERA ENTERPRISES,GONDIA vs. INCOME TAX OFFICER, CIRCLE-5, NAGPUR

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ITA 101/NAG/2023Status: DisposedITAT Nagpur10 May 2024AY 2011-12Bench: SHRI SATBEER SINGH GODARA (Judicial Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were initiated without any tangible material, constituting a mere 'change of opinion', which is not sustainable in law. Therefore, the reopening of the assessment was deemed invalid.

What were the facts?

The assessee filed its return and a regular assessment under Section 143(3) was completed. Subsequently, the Assessing Officer initiated reassessment proceedings under Section 147/148, alleging escaped assessment, and made an addition for excess salary paid to partners.

What were the issues?

Whether reassessment proceedings initiated under Section 147/148 are valid when based on a change of opinion without new tangible material, especially after a regular assessment under Section 143(3)?

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH : NAGOUR

Before: SHRI SATBEER SINGH GODARA

Hearing: 26.03.2024Pronounced: 10.05.2024

Date of Hearing : 26.03.2024 Date of Pronouncement : 10.05.2024 ORDER

This assessee’s appeal for assessment year 2011-2012 arise against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No.ITBA/NFAC/S/250/2022- 23/1050156433(1) dated 27.02.2023, in proceedings u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”).

I have heard the department at length and perused the case file.

2.

Mr. Marathe vehemently argued that both the learned lower authorities have rightly initiated sec.147/148 proceedings thereby making the impugned addition of Rs.2,22,664/- representing disallowance of excess salary paid to partners vis-à-vis the income derived in the relevant previous year. It is made clear that the assessment year herein is A.Y.2011-2012 and that the 2 ITA.No.68/NAG./2023 assessee inter alia had filed it’s return on 16.03.2012 followed by a regular assessment u/sec.143(3) of the Act on 24.12.2013. The Assessing Officer thereafter initiated the impugned sec.148/147 proceedings by recording his reasons that the assessee’s taxable income had ‘escaped assessment’ and issued his notice dated 24.11.2015 .

3.

This tribunal asked the Learned DR during the course of hearing to indicate the tangible material leading the Assessing Officer to form his foregoing reason(s) of assessee’s taxable income having escaped assessment. And that too in case of sec.143(3) regular assessment since there is no discussion in the assessment herein about the discovery of any fresh tangible material. No reply came from Revenue side. That being the case, I hereby quote CIT vs. Kelvinator of India Limited [2010] 187 Taxman 312 (SC) to hold that such a reopening is merely a ‘change of opinion’ which is not sustainable in law. Ordered accordingly.

The assessee succeeds in the instant issue of impugned reopening of assessment thereby rendering all of his other pleadings as academic.

4.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open Court on 10.05.2024.

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