The Tax Publishers2020 TaxPub(DT) 4292 (Mum-Trib)

INCOME TAX ACT, 1961

Section 147

Reopening of assessment on the basis of audit objection which was nothing but borrowed satisfaction of audit party and not AO's own satisfaction, accordingly, reassessment based upon mere audit objection could not be sustained due to lack of application of mind by AO, further, assessee could challenge the issue of reopening for the first time in second round of litigation even though this was not challenged in the first round of litigation.

Reassessment - Reason to believe - Audit objection - Assessee challenged validity of reopening in the second round of litigation

Assessee in the second round of litigation challenged validity of reassessment framed by AO under section 147 on the ground that assessment was reopened merely on the basis of objection raised by audit party. Revenue's case was that in the first round of litigation, jurisdictional issue was neither raised before AO nor before CIT(A). Held: Assessee can challenge the issue of reopening for the first time in second round of litigation, even though this was not challenged in the first round of litigation. In the instant case, it was apparent from the office note attached to assessment order framed under section 143(3) read with section 147 that assessment was reopened on the basis of audit objection which was nothing but borrowed satisfaction of audit party and not AO's own satisfaction. There was no application of mind by AO while recording reasons under section 148(2). Accordingly, reassessment based upon mere audit objection could not be sustained.

Followed:Xerox Modicorp Ltd. v. Dy.CIT (2013) 350 ITR 308 (Del) : 2013 TaxPub(DT) 493 (Del-HC), Inventors Industrial Corporation Ltd. v. CIT, FIS Global Business Solution India (P) Ltd. v. Asstt. CIT and PCIT v. Chand & Co. Ltd..

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-07



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