Issue examined under original assessment proceeding: Whether re-opening in such case is justified
- The Assessee company engaged in the business activities of designing, developing and exporting of computer software and software services, filed its return of income originally on 30.09.2008 declaring total income at Rs. 26.83 lakhs for the A.Y. 2008-09 which was completed under section 143(3) read with section 144C (13) of the Act on 21.11.2012 upon assessing income at Rs. 18.54 crores. Subsequently, the said assessment was reopened under section 147 by issuance of notice under section 148 of the Act dated 18.03.2015.
- The notice under section 148 was issued on the basis of the internal audit objection on 04.03.2015. In response to the notice under section 148 of the Act, the Assessee requested the Revenue to consider the original return of income filed for A.Y. 2008-09 and under a letter dated 21.04.2015 requested to provide the reasons for reopening for the said assessment. Upon receiving the reasons the Assessee by and under a letter 18.11.2015 objected to such reopening which was disposed off on 29.01.2016. Ultimately the assessment was completed on 29.03.2016 upon determining the total income at Rs. 20.64 crores as against the returned income at Rs. 26.83 lakhs upon making disallowance under section 40(a)(ia) of the Act to the tune of Rs. 20.38 crores which was, in turn, confirmed by the First Appellate Authority.
- All the relevant material was before the Assessing Officer at the stage of the original assessment itself. The only new input was an audit party objection which the Assessing Officer himself has not accepted. Once the Assessing Officer contests the audit objection and continues to hold the belief as he had at the time of original assessment proceedings, but reopens the assessment proceedings as a measure of abundant caution nevertheless, it cannot be said that the Assessing Officer had any reasons to believe that an income has escaped assessment – a belief which is a sine qua non for reopening the assessment.
- Hence, it was inferred that the assessment was liable to be quashed.