By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi Chartered Accountants
fiogf49gjkf0d
Section 147 – During the original assessment, facts placed before AO and detailed explanation given – AO discussed issue and then allowed deduction u/s 80HHC – hence there was application of mind by AO – matter carried to Tribunal – during pendency of appeal, AO initiated proceedings u/s 147 – while issue was subject matter of appeal, initiation of reassessment proceedings was bad in law – As AO applied his mind earlier, subsequent belief can only be considered as change of opinion on same set of facts-reopening not sustained.
Facts:
The assessee company was engaged in business of export of leather goods and textile dyes. It had filed return of income declaring total income at NIL after availing at a deduction u/s 80HHC. Assessment u/s 143(3) was completed and the Ld. AO had adjusted the trading losses against the profits of business and had then arrived at deduction u/s 80HHC. On certain other issues relating to section 80HHC, the matter was carried to the Tribunal.
While the appeal was still pending before the Tribunal, the AO had initiated reassessment proceedings u/s 147. The reason for reopening given by the AO was that his predecessor had allowed the losses in trading of goods to be set off against profit on incentives and hence erred in allowing excess deduction u/s 80HHC.
Held:
As the issue was subject matter of appeal during the pendency of appeal, issuance of notice of reassessment is bad in law.
During the original assessment, all the facts were placed before the AO and detailed explanation was given to the AO. The ld. AO had also considered certain judicial decisions while allowing set off of losses. This indicates that the AO had applied his mind at the time of original assessment. Hence, subsequent belief of AO can only be considered as change of opinion on same set of facts. Thus, reopening cannot be sustained.
