Issue examined under original assessment proceeding: Whether re-opening in such case is justified
- The assessment was originally completed under section 143(3) of the Income Tax Act, 1961 by an order dated 13.01.2014 on total income of Rs.17.08 lakhs. In the original assessment proceedings, the Assessing Officer had disallowed the interest of Rs.0.78 lakhs and completed the assessment under section 143(3). Subsequently, the assessment was reopened under section 148 of the Act for the reason of claiming the set off of remuneration received, against the loss on sale of shares and the income from other sources.
- The Assessing Officer had observed that the Assessee had received the remuneration which required to be taxed as income from salary and the loss from income from other sources was not allowable to be set off against the salary income as claimed by the Assessee as per section 71(2A) of the Act and accordingly, recorded the reasons and reopened the assessment. The reassessment was completed under section 143(3) read with section 147 by an order dated 27.11.2015 on total income of Rs.18.98 lakhs withdrawing the set off of loss allowed in the original assessment.
- Since the Assessee had admitted remuneration under the head ‘income from other sources’ and the Assessing Officer had completed the original assessment accepting the income admitted by the Assessee, it could not be said that the Assessing Officer had not examined the issue with regard to taxability of income whether the same to be brought to tax as salary income or income from other sources. The entire material with regard to receipt of remuneration, admission of income under the head ‘income from other sources’ was placed before the Assessing Officer at the time of original assessment.
- Having accepted the income as ‘income from other sources’ under section 143(3), the Assessing Officer had taken a conscious decision to assess the income under the head ‘income from other sources’. Therefore, reopening of assessment to assess the remuneration under the head ‘income from salary’ instead of ‘income from other sources’ constituted difference of opinion and the Assessing Officer was not permitted to reopen the assessment on difference of opinion.