Reopening Initiated On Basis Of Wrong Reasons Renders Very Assessment As Invalid: Mumbai ITAT

On finding the reasoning behind the Assessment made by the Assessing Officer to be wrong, the Mumbai ITAT allowed the assessee's appeal against the order of Commissioner of Income Tax (Appeals) and National Faceless Appeal Centre.

The Member of the ITAT comprising Aby T Varkey (Judicial Member) and S. Rifaur Rahman (Accountant Member) observed that “the reason for reopening itself fails in this case, prima facie the assessment was reopened with the wrong reasoning that assessee has not filed its return of income by merely observing from IT Portal. It is fact on record that assessee has filed its return of income and Assessing Officer has accepted the same.” (Para 18)

“The assessment order is bad in law for reopening the assessment with the wrong reasons and appellate order passed with the amended provisions under section 12A(1)(ba) is also bad in law”, added the Bench. (Para 19)

As per the brief facts of the case, the case of the assessee was re-opened u/s 147 after recording reasons and approval under section 151(1) of the Act from the Commissioner of Income Tax (Exemptions), Mumbai. The Assessing Officer has reproduced the reasons for reopening that as per ITD system assessee has not filed its Return of Income. Subsequently, notice u/s 148 was issued and served on the assessee. In response authorised representative of the assessee confirmed the receipt of notice issued under section 148 of the Act and filed return of income under section 139(1) of the Act. Subsequently notices under section 143(2) and 142(1) of the Act along with questionnaire were issued and served on the assessee. In response authorised representative of the assessee attended and submitted the relevant information as called for. By relying on section 12A(1)(b) of the Act, the Assessing Officer held that assessee is not eligible to claim deduction under section 11 of the Act.

The Bench noted that Form 10AC in support of the Registration under section 12A(1) registered in the name of assessee, was duly supplied.

Further, the Bench observed that assessee has submitted the evidences before Assessing Officer that assessee has filed its return of income. However, the return filed by the assessee is beyond the period of limitation under section 139(4A) of the Act.

The Bench also pointed that the Assessing Officer invoked the provisions of section 12A(1)(b) of the Act as per which assessee has failed to get its accounts audited and furnish the return of income along with the audited report, in case of failure the assessee is not eligible to get the exemption under section 11 of the Act.

The Bench therefore clarified that CIT(A) has wrongly invoked the provisions of section 12A(1)(ba) and at that point of time, there was non-existence of section 12A(1)(ba).

Thus, on finding that the assessment made by the Assessing Officer is with wrong reasoning, the ITAT quashed the order.

Counsel for Appellant/ Taxpayer: Drutika Kitwat

Counsel for Respondent/ Department: S.N. Kabra

Case Title: Good Shepherd Church Verses Income Tax Officer

Case Number: ITA Nos. 2181 & 2182/MUM/2023

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