Consolidation of cases of year 2020 for Section 147 & 148 in favour of the Assessee.

1       { In Favor of Assessee } [A  (SC]-[S.147]

BPTP Ltd. v. CIT (2020) 421 ITR 59 / 312 CTR 514/185 DTR 372 / 113 Taxmann.com 587 (DelhiHC)

Reassessment-After the expiry of four years-Change of opinion-Details were furnished in response to questionnaires-Failure to deduct tax at source-Notice is not valid.[S. 40(a)(ia), 148, 194I,Art.226]

Allowing the petition the Court held that the recorded reasons except for using the expression "failure on the part of the assessee to disclose fully and truly all material facts", did not specify what was the nature of deactfault or failure on the part of the assessee. The reasons also did not explain or specify what was the rationale connection between the reasons to believe and the material on record. It was evident on a perusal of the scrutiny questionnaires issued by the Assessing Officer and the information furnished in response thereto by the assessee that there had been no failure on the part of the assessee in furnishing the information. On the other hand, there was non-application of mind on such material on the part of the Assessing Officer to make an appropriate determination in accordance with law. The Assessing Officer in paragraph 2 of the recorded reasons quoted that "external development charges is covered by the provisions of section 194 of the Act. The assessee had failed to deduct tax at source on the payments made to the Haryana Urban Development Authority". There was no explanation or rationale for this observation made by the Assessing Officer. It was not clear how the payment of external development charges being in the nature of statutory fees, could be subject to withholding tax under section 194 of the Act, a provision that was applicable to dividends. The nature of dividend payment was intrinsically different from external development charges and, therefore, the apparent reason for reopening was erroneous, irrational and fallacious. The notice did not state that the external development charges collected by the Haryana Urban Development Authority had not been subjected to tax as income in the hands of the Haryana Urban Development Authority. This also showed non-application of mind. The Revenue in its counter affidavit sought to elaborate on these reasons by contending that the external development charges payment was akin to rent. However, firstly, such an understanding was not borne out from the recorded reasons and, secondly, the Department could not by way of a counter affidavit supplement the recorded reasons by introducing such legal submissions. The source of the power, as sought to be argued, was not discernible. The notice was not valid. (AY. 2012-13 2013-14)

Note:- SLP of revenue is dismissed, PCIT v. BPTP Ltd. (2021) 277 Taxman 298 (SC)/PCIT v. BPTP Ltd. (2021) 278 Taxman 105 (SC

2       { In Favor of Assessee } [A  (SC]-[S.147]

DCIT v. MSEB Holding Co. Ltd. (2019) 102 taxmann.com 288 (Bom.HC)

Reassessment-After the expiry of four years-Change of opinion-interest income on fixed deposit assessed as business income-Re assessment on the ground that it has to be assessed as income from other sources.[S.56,148,Art. 226]

Assessee, in return of income claimed interest income earned on fixed deposit as part of its business income and AO disallowed same on ground that it did not carry out any business during year and passed assessment order under S. 143(3) on 30-3-2014 and subsequently AO issued reopening notice dated 26-3-2018 on ground that interest income was required to be taxed as income from other sources. On writ the Court held that notice was issued beyond period of four years from end of assessment year 2011-12 and there had been a complete disclosure of all material facts on part of assessee during regular assessment proceedings under S. 143(3), impugned notice was clearly hit by first proviso to section 147 and deserved to be set aside. (AY. 2011-12)

Note:- SLP of revenue is dismissed,since tax effect is less than Rs 2 Crore. DCIT v. MSEB Holding Co. Ltd. (2020) 269 Taxman 22 (SC

3       { In Favor of Assessee } [A  (SC]-[S.147]

Dhirendra Hansraj Singh v. ACIT (2020) 421 ITR 176 (Guj.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts-Deduction is allowed in the original assessment proceedings-Notice of reassessment is held to be not valid.[S.80IB(11A), 148,Art. 226]

Allowing the petition the Court held, that the assessee had furnished various particulars as required by the Assessing Officer, in support of the claim to depreciation and allowances of deduction under section 80-IB(11A). The claims had been allowed in the original assessment. Notice after four years on the ground that the deductions were erroneous, constituted a change of opinion. The notice was not valid. (AY. 2010-11)

Note:- SLP of revenue is dismissed,CIT v. Dhirendra Hansraj Singh(2018) 409 ITR 15 (St)(SC)

4       { In Favor of Assessee } [A  (SC]-[S.147]

Bajaj Allianz Life Insurance Co. Ltd. v. DCIT (2020) 269 taxman 208 (Bom.HC)

Reassessment-After the expiry of four years-Reasons recorded there was no reference to any new tangible material-Financial statement-Reassessment notice is quashed.[S.44, 148, Art. 226]

Assessee is engaged in business of life insurance, filed its return declaring taxable income in accordance with provisions of S. 44 of the Act. After expiry of four years from end of relevant year, AO sought to initiate reassessment proceedings. Objections to reassessment proceedings were rejected. On writ the Court held that in reasons recorded there was no reference to any new tangible material, but reference was only to financial statement of assessee itself. Accordingly since there was no failure on part of assessee to disclose all material facts at time of assessment, initiation of reassessment proceedings on basis of mere change of opinion was not justified. (AY. 2012 13)

Note:- SLP of revenue dismissed , Dy.CIT v Bajaj Allianz Life Insurance Co. Ltd ( 2021)278 Taxman 104 (SC

5       { In Favor of Assessee } [A  (SC]-[S.147]

PCIT v. Vaman Estate(2020)113 taxmann.com 405 (Bom.HC)

Reassessment-After the expiry of four years-Reopened on the ground that in another assessee where similar claim with the same housing project-No failure on the part of the assessee to disclose truly and fully all relevant facts-reassessment held to be invalid. [S. 80IB(10)]

The AO has not linked any material in order to make this observation, he mainly relied on the findings of the AO of another Assessee same conclusion was reversed by the CIT(A) noting that in fact all along there was evidence suggesting that the commencement of construction of the housing project was some time in the year 2002. And the assessment of another assessee was set aside. Hence, there is no part of the to remain undisclosed by the assessee. Reassessment is invalid. (Arising out of 5584 of 2012 dt.15/07/2015)(ITA No.678 of 2016, dt.07/11/2018)(AY. 2004-05)

Note:- SLP of revenue is dismissed, due to low tax effect, (SLP No.22927/2019 dt.06/09/2019)(2019)416 ITR 135(St.)(SC)(2020) 113 taxmann.com 406 / 269 Taxman 196 (SC

6       { In Favor of Assessee } [A  (SC]-[S.148]

Durlabhai Kanubhai Rajpara v. ITO (2020) 114 taxman.com 481 (Guj.HC)

Reassessment-Notice-Issue of notice in the name of dead person-Notice was quashed. [S. 131(IA), 147,159, 292BB, Art. 226]

Notice was issued in the name of dead person. The petitioner prayed for withdrawal of notice. The Assessing Office by letter/order dated 25.7.2018 however, rejected the objections raised by the petitioner on the ground that the petitioner has never given any intimation regarding the death of Shri Kanubhai Nagjibhai Rajpara to the jurisdictional Assessing Officer and further, it was also stated that notice under section 148 of the Act was served personally on 31.3.2018 at the address of the petitioner as well as by speed post. The petitioner was required to reply to the said notice by filing return. Respondent also stated that Permanent Account Number of late Shri Kanubhai Nagjibhai Rajpara is active and no intimation is given with regard to his death and therefore, notice issued under section 148 of the Act is proper and in accordance with law. On writ the court held that even prior to issuance of notice, department was aware about the death of the petitioner's father since on 13.3.2018 in response to the summons issued under section 131(1A) of the Act, the petitioner had intimated to the department about the death of his father. Therefore, it cannot be said that the respondent was not aware about the death of the father of the petitioner and he could have belatedly issued notice under section 159 of the Act upon the legal representatives of late Shri Kanubhai Nagjibhai Rajpara. Accordingly the proceeding was quashed. (AY. 2011-12)

Note:- SLP of revenue is dismissed, (2020) 270 Taxman 9 (SC

7       { In Favor of Assessee } [(Bom.HC]-[S.147]

Aberdeen Emerging Markets Equity Fund v. DCIT(IT)(2020) 191 DTR 1 /315 CTR 347 (Bom.HC)

Aberdeen Asia Pacific Excluding Japan Equity Fund v. DCIT(IT)(2020) 191 DTR 1 /315 CTR 347 (B

Reassessment-Carry forward and set off losses-Change in the structure of entity from Trust to LLP-Status of an entity incorporated abroad has to be determined even in India according to the law of the Country where the entity was incorporated-Notice to reassessment was quashed. [S. 74, 148, Art.226]

The assessee was a sub-fund or series of Abedeen Institutional Comingled Funds, LLC (AICFL) a Delaware (USA) based limited liability Company. The losses were properly declared in the return. Losses were allowed for the assessment years 2011-12 and subsequent years. Revenue issued the notice u/s 148 for denying the carry forward and set off losses u/s 74 due to change in structure of the entity. On writ allowing the petition the Court held that the reasons recorded for reopening of assessment was preciously on the ground of change of status that the claim of the assessee i. e. the assessee was found to be not acceptable which led to be the formation of the belief that income chargeable to tax has escaped assessment. The contention of alternative remedy is rejected by the Court. The Court held that if the Assessing Officer had no jurisdiction to initiate reassessment proceeding, the mere fact that the subsequent orders have been passed would render the challenge to jurisdiction infructuous. If the very basis for reopening assessment does not survive, orders on such re-opening would not survive too. Accordingly the notice u/s 148 was quashed and consequential draft assessment order passed thereafter were also held to be unsustainable. (AY. 2011-12, 2012-13) Aberdeen Asia Pacific Including Japan Equity Fund v. DCIT(IT)(2020) 191 DTR 1/ 315 CTR 347 (Bom.HC)

8       { In Favor of Assessee } [(Karn.HC]-[S.147]

CIT v. Ramesh Shroff (2020) 275 Taxman 323 (Karn.HC)

Reassessment-Capital gains-Agricultural land-Later the property used for commercial purposes-No new tangible material-Reassessment is held to be bad in law. [S. 2(14), 54F, 148]

Assessee sold a land on 18-1-2011 for sale consideration of certain amount. Assessee filed its return of income contending that said land was agricultural land and, thus, capital gain on its transfer was exempt. Same was accepted and return of assessee was processed under section 143(3). Subsequently, Assessing Officer issued a reopening notice against assessee on ground that land sold by assessee was situated within limits of city corporation and same could not be treated as an agricultural land. Accordingly, he assessed sale consideration from sale of lands as long-term capital gains. It was noted that Tribunal found that land sold by assessee came within corporation limits by virtue of Government order no. 97, dated 19-7-2011. Allowing the appeal the Tribunal held that when assessee sold such land it was not within city municipal corporation limits. Tribunal further found that assessee had already brought entire details about sale of land during original assessment. Said Government notification was also very much available when original assessment was completed and Assessing Officer had no new tangible material available to clarify its reopening. Reassessment was quashed. Court also held that since new property purchased by assessee was residential property, merely because assessee had put it to use for non-residential purpose to run restaurant in it, that too, much after its purchase, assessee could not be denied exemption under section 54F of the Act. (AY. 2011-12)

9       { In Favor of Assessee } [B (HC). (Bom.HC). ]-[S.147]

Uni VTL Precision (P) Ltd. v. Dy.CIT (2020) 269 Taxman 278 (Bom.HC).

Reassessment-After the expiry of four years-Share capital-Change of opinion-Existing share holders-Subject matter of regular assessment-Reassessment notice is held to be bad in law. [S.68, 148, Art. 226]

Assessment was completed under section 143(3). Assessing Officer issued notice under section 148 after 4 years from end of relevant assessment year on ground that income chargeable to tax had escaped assessment doubting genuineness of transaction of issue of shares by assessee-company to its existing shareholders. The assessee filed writ before High Court. Allowing the petition the Court held that since very issue on which Assessing Officer had made reasons to believe that income chargeable to tax had escaped assessment were subject matter of regular assessment proceedings under section 143(3), it was case of change of opinion by Assessing Officer, therefore, impugned notice was to be quashed. (AY. 2012-13)

10       { In Favor of Assessee } [(Bom.HC]-[S.147]

S.S. Landmarks v. ITO (2020) 185 DTR 149 / 312 CTR 402 / 274 Taxman 331 (Bom.HC)

Reassessment-After the expiry of four years-Housing projects-Completion certificate-No failure to disclose material facts-Reassessment notice is held to be bad in law. [S.80(IB)(10), 148, Art.226]

Allowing the petition the Court held that , merely alleging that there is failure to disclose truly and fully all material facts necessary for assessment, would not satisfy the jurisdictional requirement unless the reasons indicate what material facts the Petitioner had failed to disclose fully and truly during the course of the regular assessment. Referred Bombay Stock Exchange Ltd. v. Dy.CIT(E)(2014) 365 ITR 181 (Bom.HC) wherein the Court observed that “ In the present case, admittedly, there are no details given by the Assessing Officer (respondent no.1) as to which fact or material was not disclosed by the petitioner that led to its income escaping assessment. There is merely a bald assertion in the reasons that there was a failure on the part of the petitioner to disclose fully and truly all material facts without giving any details thereof. This being the case, the impugned notice is bad in law and on this ground alone the petitioner is entitled to succeed in this writ petition”. (AY. 2012-13)

11       { In Favor of Assessee } [(Bom.HC]-[S.147]

State Bank of India v. Vineet Agrawal, ACIT (2020) 428 ITR 519 /317 CTR 388/ 195 DTR 81 /(2021) 276 Taxman 229 (Bom.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts-Denial of exemption-Reassessment notice is held to be not valid.[S. 10(15)(iv)(c), 148,154, Art. 226]

Allowing the petition the Court held that when the assessee brought to the notice of the Assessing Officer the details and information furnished by it by letter dated August 22, 1992, the Assessing Officer rectified the assessment order by an order passed under section 154 wherein it was held that relevant details were filed by the assessee and after going through the documents, allowed exemption under section 10(15)(iv). Thus the condition precedent for reopening the concluded assessment of the assessee was absent in the present case. In such circumstances, issuance of the notice under section 148 of the Act was clearly without jurisdiction and was therefore illegal and invalid.(AY. 1990-91)

12       { In Favor of Assessee } [(Bom.HC]-[S.147]

Asset Reconstruction Company India Pvt. Ltd. v. Dy.CIT (2020) 424ITR 715 (Bom.HC)

Reassessment-After the expiry of four years-Purchasing non-performing asset from Bank and receiving payment-Alleged bogus entry provider-Reasons neither supported by an affidavit or oral submission-Notice is held to be invalid. [S.148]

The assessee is engaged in the business of securitisation and asset reconstruction and acted as trustees for the non-performing financial assets acquired from various banks and financial institutions. The assessment order was passed u/s 143(3) of the Act. After a period of four years, the Assessing Officer issued a notice under section 148. He recorded reasons that he had received information from the Investigation Wing that SCS was a main person who was engaged in providing bogus accommodation entries through several companies controlled by him, that it was found that the assessee had entered into transactions with A, that the assessee had purchased non-performing assets of A from a bank in the year 2009, that against this A had paid a sum of Rs. 2.70 crores to the assessee, that A was engaged in providing bogus accommodation entries at the instance of SCS and that on the basis of such information, the Assessing Officer was prima facie of the view that the assessee had dealings with A which inturn had indulged in dealing with various accommodation entries and therefore, income chargeable to tax of Rs. 2.70 crores had escaped assessment. The objections raised by the assessee were rejected. On a writ allowing the petition the Court held that the reasons recorded for reopening the assessment did not provide the live link to the formation of belief by the Assessing Officer that the assessee’s income chargeable to tax had escaped assessment. The assessee having purchased the non-performing assets from the bank had received the payment of Rs. 2.70 crores from A. This had nothing to do with the alleged dubious dealings of A at the instance of SCS the bogus entry provider. The very formation of the belief by the Assessing Officer that income chargeable to tax in the hands of the assessee had escaped assessment lacked validity.(AY.2011-12)

13       { In Favor of Assessee } [(Bom.HC]-[S.147]

J. S. & M. F. Builders v. A. K. Chauhan (2020) 426 ITR 460 /315 CTR 473/ 272 Taxman 349(Bom.HC)

Reassessment-After the expiry of four years-Year of chargeability-Reassessment is held to be bad in law-No failure to disclose material facts.[S. 45(1), 45(2),143(3),143(1), 148, Art.226]

The assessee filed the return of income showing the income from business and capital gains u/s 45(2) of the Income-tax Act. In the course of the assessment proceedings the petitioner furnished all the relevant details including the nature of the activities undertaken, details of the flats sold and the closing stock. The assessment was completed u/s 143(3) of the Act. The AO reopened the assessment on the ground that the closing stock should have been valued on the basis of market price, capital gain was valued at taking higher value as cost of acquisition. Allowing the petition the Court held that the Capital gains are chargeable to tax when individual flats are sold and not when the land is transferred to the co-operative society formed by the flat purchasers. The flat purchasers, by purchasing the flats, had certainly acquired a right or interest in the proportionate share of the land but its realisation is deferred till formation of the co-operative society by the owners of the flats and eventual transfer of the entire property to the co-operative society. Accordingly considering an overall consideration of the entire matter, it is quite evident that there was no basis or justification for respondent to reopen the assessment. The reasons rendered could not have led to formation of any belief that income had escaped assessment within the meaning of the aforesaid provision.Accordingly the reassessment notices were quashed.Relied on Chainrup Sampatram v. CIT(1953) 24 ITR 481 (SC) for the proposition that it would be a misconception to think that any profit arose out of valuation of the closing stock. (AY. 1992-93, 1993-94, 1994-95, 1995-96)

14       { In Favor of Assessee } [(Guj.HC]-[S.147]

Jivraj Tea Ltd. v. ACIT (2020) 426 ITR 146 (Guj.HC)

Reassessment-After the expiry of four years-No new tangible material-Maintaining separate books of account-Notice is held to be bad in law. [S.80IA, 148]

Allowing the petition the Court held that on the facts, the reopening of the assessment was on a change of opinion. There was nothing on record to indicate that there was failure on the part of the assessee to disclose truly and fully all the material facts. There was no tangible material available for the purpose of issuing the notice under section for reopening the assessment beyond the period of four years and was unsustainable.(AY.2011-12)

15       { In Favor of Assessee } [(Guj.HC]-[S.147]

Hitachi Hi Rel Power Electronics P. Ltd. v. ACIT (2019) 106 CCH 0421 / (2020)421 ITR 574 (Guj.HC)

Reassessment-After the expiry of four years-Share premium-No failure to disclose material facts-Reassessment notice on mere surmise that the assessee had received amounts as share premium is held to be not valid.[S.148]

Allowing the petition the Court held that in the reasons recorded that there was no mention at all of the assessee having not disclosed fully or truly material facts which were necessary for the purpose of computing the income of the assessee. Even on the merits there was no basis to proceed on the premise that the allocation of shares was at an artificially high premium. Merely because a sizeable sum was received in the nature of share premium during the year under consideration, that would not automatically mean that the same was artificially increased. The duty on the part of the assessee to explain the nature of credits and genuineness and justification of the share premium would arise when called upon during the assessment or a validly reopened assessment. At any rate, the reopening of assessment which was framed after the scrutiny would not be permissible for a fishing or roving inquiry. The notice of reassessment was not valid.(AY. 2011-12)

16       { In Favor of Assessee } [(Guj.HC]-[S.147]

Gayatri Microns Ltd. v. ACIT (2020) 424 ITR 288 / 114 taxmann.com 318 (Guj.HC)

Reassessment-Amalgamation-Notice issued against transferor-Amalgamating entity ceases to have existence-Notice and subsequent proceedings unsustainable. [S.148, Art. 226]

Allowing the petition the Court held that ,notice issued against transferor company, amalgamating entity ceases to have existence hence the notice and subsequent proceedings unsustainable. Accordingly the notice and all the proceedings taken pursuant thereto, were to be quashed and set aside.(AY.2012-13)

17       { In Favor of Assessee } [(Guj.HC]-[S.147]

Vinodbhai Jivrajbhai Radbiya v. ITO (2020) 270 Taxman 304 (Guj.HC)

Reassessment-Any hypothesis or contingency that may emerge in future-Protective addition-Reassessment is bad in law. [S. 148, Art. 226]

The assessee filed writ against the reassessment proceedings. Allowing the petition the Court held that reopening of assessment could be made only when Assessing Officer has a reason which is present in his mind when he forms his reason to believe that income has escaped assessment; statute does not contemplate reopening of an assessment under section 148 on a hypothesis or a contingency which may emerge in future. Where though assessment had already been made in hands of association of persons, Assessing Officer sought to reopen assessment to make protective addition in hands of assessees, proceedings under section 148 were wholly without jurisdiction.(AY. 2919-20)

18       { In Favor of Assessee } [(Guj.HC]-[S.147]

N.H. Kapadia Education Trust v. ACIT (2020) 190 DTR 184 (Guj.HC)

Reassessment-Charitable Trust-Corpus donation-Change of opinion-No new facts-Reassessment is held to be bad in law. [S. 2(15) 11, 12A, 148, Art. 226]

Allowing the petition the Court held that the assessee had placed all the material before the Assessing Officer and where there was a doubt, even that was clarified by the assessee in its letter dated November 8, 1995. If the Assessing Officer, while passing the original assessment order, chose not to give any finding in this regard, that cannot give him or his successor in office a reason to reopen the assessment of the assessee or to contend that because the facts were not considered in the assessment order, a full and true disclosure was not made. Since the facts were before the Assessing Officer at the time of framing the original assessment, and later a different view was taken by him or his successor on the same facts, it clearly amounts to a change of opinion. This cannot form the basis for permitting the Assessing Officer or his successor to reopen the assessment of the assessee. (AY. 2006-07 )

19       { In Favor of Assessee } [(Guj.HC]-[S.147]

Niranjan Chimanlal Jani v. Dy.CIT (2020)425 ITR 162 (Guj.HC)

Reassessment-Long-term capital gains-Improvement cost on land-Examined by the Assessing Officer in original assessment proceedings-Notice for reassessment is held to be bad in law. [S.45, 148]

Allowing the petition the Court held that it was only after examination of the sale transaction of the land and related issues, that the Assessing Officer had passed the order under S. 143(3) Along with the sale deed, the assessee had also filed a report of the valuer who had estimated the cost of construction of staff room, office, godown, labourers’ rooms, compound wall, borewell, etc., at Rs. 5.09 lakhs. The reasons recorded lacked validity and there was lack of application of mind on the part of the Assessing Officer when he had conveyed that the cost of improvement of Rs. 5.09 lakhs was not reflected in the assessee's books of account. The notice issued under S. 148 for reopening the assessment was quashed.(AY.2012-13)

20       { In Favor of Assessee } [(Guj.HC]-[S.147]

Durlabhai Kanubhai Rajpara v. ITO (2020) 424 ITR 428 (Guj.HC)

Reassessment-Notice issued in name of dead person-Notice and proceedings invalid. [S.131(IA), 148,159, 292A, Art. 226]

Allowing the petition the Court held that the petitioner at the first point of time had objected to the issuance of notice under section 148 in the name of his deceased father (assessee) and had not participated or filed any return pursuant to the notice. Therefore, the legal representatives not having waived the requirement of notice and not having submitted to the jurisdiction of the Assessing Officer pursuant thereto, the provisions of S. 292A would not be attracted and hence the notice had to be treated as invalid. Even prior to the issuance of such notice, the Department was aware about the death of the petitioner's father (assessee) since in response to the summons issued under S. 131(1A) the petitioner had intimated the Department about the death of the assessee. Therefore, the Department could not say that it was not aware of the death of the petitioner’s father (assessee) and could have belatedly served the notice under S. 159 upon the legal representatives of the deceased-assessee. The notice dated March 28, 2018 issued in the name of the deceased-assessee by the Assessing Officer under S.148 as well as further proceedings thereto were to be quashed and set aside.(AY.2011-12)

21       { In Favor of Assessee } [(Guj.HC]-[S.147]

Pankajbhai Jaysukhlal Shah v. ACIT (2020)425 ITR 70/ 185 DTR 306/ 312 CTR 300 (Guj.HC)

Reassessment-Officer recording reasons and issuing notice must be the jurisdictional Assessing Officer-Reasons recorded by jurisdictional Assessing Officer-E. assessment Scheme-Notice issued by officer who did not have jurisdiction over assessee-Defect not curable-Notice and consequential proceedings and order invalid. [S.148, 292B]

An order 4 was passed u/s 143(1) of the Act. A notice dated March 29, 2018 under section 148 was issued to reopen the assessment. The assessee submitted that the original return filed by him be treated as the return filed in response to the notice under S. 148 and requested the Assessing Officer to supply a copy of the reasons recorded for reopening the assessment.. The assessee participated in the assessment proceedings and raised objections against the initiation of proceedings under S. 147 on the ground that the assumption of jurisdiction on the part of the Assessing Officer by issuance of notice under S. 148 was invalid contending that the notice was issued by the ITO, Ward No. 2(2), whereas the reasons were recorded by the Dy. CIT, Circle 2. The Department contended that issuance of the notice by the ITO was a procedural lapse which had happened on account of the mandate of e-assessment scheme and non-migration of the permanent account number of the assessee in time and that such defect was covered under the provisions of S. 292B and therefore, the notice issued could not be said to be invalid. On writ allowing the petition the Court held that while the reasons for reopening the assessment had been recorded by the jurisdictional Assessing Officer, viz., the Deputy Commissioner, Circle 2, the notice under section 148(1) had been issued by the ITO, Ward 2(2), who had no jurisdiction over the assessee, and hence, such a notice was bad on the count of having been issued by an Officer who had no authority to issue such notice. It was the Officer recording the reasons who had to issue the notice under S. 148(1) whereas the reasons had been recorded by the jurisdictional Assessing Officer and the notice had been issued by an Officer who did not have jurisdiction over the assessee. Accordingly no proceedings could have been taken under S. 147 in pursuance of such invalid notice. The notice under S. 148(1) and all the proceedings taken pursuant thereto could not be sustained.(AY.2011-12)

22       { In Favor of Assessee } [(HC]) [S.147]

Nielsen (India) P. Ltd. v. Dy.CIT (2020) 187 DTR 451 (Bom.HC)

Reassessment-Failure to deduct tax at source-No failure to disclose material facts-Reassessment is bad in law.[S.40(a)(ia), 148, Art. 226]

Allowing the petition the Court held that there was no failure to disclose all material facts, there was scrutiny of the petitioner's expenditure. After raising queries and eliciting response from the petitioner, the Assessing Officer had passed the order of assessment making limited disallowance. On both these grounds i.e non failure to disclose true and full material facts and change of opinion, the impugned notice must be quashed.(AY. 2011-12)

23       { In Favor of Assessee } [(Mad.HC]-[S.147]

International Flavours Fragrances India Pvt. Ltd. v. JCIT (2020)429 ITR 28/ 274 Taxman 134 (Mad.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts-Royalty payment-Reassessment is not valid. [S.92CA,147]

Allowing the petition the Court held that All the details relating to the payment of royalty were supplied by the assessee commencing from the disclosures in the annexures to its return of income. Queries and responses specific to the issue were exchanged between the assessee on the one hand and the Transfer Pricing Officer and the Assessing Officer on the other. The reasons for reassessment were premised upon the classification of the royalty paid by the assessee being capital in nature, as against the claim of its being revenue in nature, by the assessee and nowhere contained an allegation of any failure by the assessee to make a disclosure in this regard. The order rejecting the objections raised by the assessee was quashed.(AY.2013-14)

24       { In Favor of Assessee } [(Mad.HC]-[S.147]

B. Kasi Viswanathan v. ITO (2020)425 ITR 538 /187 DTR 467/ 317 CTR 993/ 274 Taxman 173 (Mad.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts-Long term capital gains-Notice held to be not valid. [S. 54, 148 Art. 226]

Allowing the petition the Court held that it was evident that the assessee had claimed exemption with respect to long-term capital gains under section 54, in his return filed for the assessment year 2009-10. Before the assessment was completed, the assessee was called upon to furnish evidence in support of his claim for deduction under section 54. The case was later selected for scrutiny and a notice was issued under section 143(2). Details were called for and explanations were offered on behalf of the assessee. Thereafter, an assessment order was passed granting the deduction. There was true and full disclosure of all materials required for assessment by the assessee for claiming deduction. Therefore, on this issue, the respondent could not proceed to pass an order under S. 147 treating the gains from sale of house property in Mumbai as short-term capital gains. The order was not valid.(AY.2009-10)

25       { In Favor of Assessee } [(Mad.HC]-[S.147]

Asianet Star Communications Pvt. Ltd. v. ACIT (2019) 104 CCH 0550/ (2020)422 ITR 47/ 191 DTR 152/ 317 CTR 732 (Mad.HC)

Reassessment-After the expiry of four years-One year with in four years-Audit objection-Amortisation of programme/movie cost and deduction of tax on foreign remittances-No failure to disclose material facts-Reassessment notice is not valid.[S.148]

Allowing the petition the court held that the assessee had been categorising and claiming expenditure incurred on programmes/film rights as revenue for several years and this stand had not been found fault with by the Department. Such expenses were also reflected faithfully in its financials that had been circulated specifically in the course of the original assessment proceedings, notwithstanding that they had been filed along with the return of income. The statutory condition imposed for availment of the extended period of limitation had not been satisfied and the proceedings for reassessment for the assessment year 2011-12 were barred by limitation. As regards the assessment year 2013-14, the proceedings had been initiated within four years from the end of the relevant assessment year. The two questions proposed for reassessment, being amortisation of programme/movie cost and deduction of tax on foreign remittances, arose from a perusal of the financials themselves. The audited financials, including the profit and loss accounts and audit report, presented clearly all details in regard to these two issues. Admittedly, and even in terms of the reasons stated, there was no new material that had come to the notice of the authorities and the exercise was undertaken solely on the basis of the materials already supplied by the assessee and available on the records of the Department. Moreover, the proceedings for reassessment had been initiated on the basis of an objection raised by an audit party. Accordingly the notice was not valid.(AY.2011-12, 2013-14)

26       { In Favor of Assessee } [(Mad.HC]-[S.147]

City Union Bank Ltd. v. ACIT (2020) 425 ITR 475 (Mad.HC)

Reassessment-After the expiry of four years-Primary facts disclosed-Assessing Officer not making appropriate calculation-Notice of reassessment issued without jurisdiction-Existence Of Alternate Remedy would not bar issue of writ to quash notice. [S.14A, 148, Rule 8D,Art. 226]

Allowing the petition the Court held that the assessee had demonstrated that the conditions precedent to the exercise of jurisdiction under S. 147 did not exist and the Asst.Commissioner had therefore no jurisdiction to issue the notice in respect of the assessment year 2011-12 after the expiry of four years. When the issue touches on the jurisdiction of the authority, the existence of alternative remedy was no ground to deny relief to the assessee. Court also held that there was no failure on the part of the assessee. On the other hand, there appeared to be a failure on the part of the Assessing Officer to make an appropriate determination of the amount of expenditure in terms of section 14A. The other reason cited by the authority was also not sufficient. It was beyond dispute that the census figures for the year 2011 were made available only a few years later. The assessee could not have looked into the future while submitting its return of income. The notice was not valid.(AY.2011-12)

27       { In Favor of Assessee } [(Pat.HC]-[S.147]

Mukul Kumar Singh v. CIT (2020)429 ITR 21 (Pat.HC)

Reassessment-With in four years-Valuation report-Non-application of mind by Authorities-Orders quashed and set aside. [S. 142A, 143(3), 148,264, Art. 226]

Allowing the petition the Court held that the assessee had disclosed full particulars. Despite the assessee having submitted his valuation report dated January 10, 2005 why the request calling for a valuation report was made only on October 19, 2006 and why the report reached the officer on November 5, 2007 were all questions which were not clear from the record. Without meeting the essential ingredients of application of mind to the various material, necessitating reopening of the assessment was missing. The order passed by the Deputy Commissioner under section 143(3) / 147 as also by the Commissioner was set aside.(AY.2004-05)

28       { In Favor of Assessee } [(Bom.HC]-[S.148]

Rupa Shyamsundar Dhumatkar v. ACIT (2020) 420 ITR 256/ 275 Taxman 453 (Bom.HC)

Reassessment-Notice to dead person-Notice to legal heir of deceased Assessment order is held to be invalid.[S.147, Art.226]

Allowing the petition the Court held that as per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the S. 148 notice is set aside and order of assessment stands annulled.Followed Alamelu Veerappan v. ITO (2018) 257 Taxman 72 (Mad.HC),, and Chandreshbhai Jayntibhai Patel v. ITO (2019) 413 ITR 276 (Guj.HC), followed)(AY. 2007-08)

29       { In Favor of Assessee } [(DelhiHC]-[S.148]

Savita Kapila (Legal Heir of late Shri Mohinder Paul Kapila)v. ACIT (2020) 426 ITR 502/ 192 DTR 73/ 273 Taxman 148 / 316 CTR 465 (DelhiHC)

Reassessment-Notice issued to deceased person is not valid-No legal requirement for legal representatives to report death of assessee to Income-Tax Authorities-Not a curable defect-Existence of alternative remedy is not an absolute bar to issue of writ-Notice and order passed was quashed as without jurisdiction. [S.147, 149(1)(b),159 292BB, Art.226]

The assessee, MPK, expired on December 21, 2018. A notice dated March 31, 2019 under section 148 was issued in his name. An assessment order was passed in the name of one of his legal representatives on December 27, 2019. On a writ petition to quash the notice and consequential proceedings. Allowing the petition the Court held that the notice dt. March 31, 2019, under S. 148 of the Act was issued to the deceased-assessee after the date of his death, December 21, 2018 and thus inevitably the notice could never have been served upon him. Consequently, the jurisdictional requirement under S. 148 of the Act, of service of notice was not fulfilled. Issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Consequently, S. 292B of the Act does not apply. S. 292BB is applicable to an assessee and not to the legal representatives. S. 159 of the Act applies to a situation where proceedings are initiated or are pending against the assessee when he is alive and after his death the legal representative steps into the shoes of the deceased-assessee. There is no statutory requirement imposing an obligation upon legal heirs to intimate the death of the assessee.An alternative statutory remedy does not operate as a bar to maintainability of a writ petition where the order or notice or proceedings are wholly without jurisdiction. If the Assessing Officer had no jurisdiction to initiate assessment proceedings, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous.(Referred Whirlpool Corporation v. Registrar of Trade Marks [1998] 8 SCC 1, PCIT v. Maruti Suzuki India Ltd (2019) 416 ITR 613 (SC) Sudha Prasad (Smt). v. CCIT (2005) 275 ITR 135 (JharkhandHC) distinguished.The notice dated March 31, 2019 and all consequential orders and proceedings passed or initiated pursuant thereto including orders dated November 21 and December 27, 2019 were quashed.(AY.2012-13)

30       { In Favor of Assessee } [(Guj.HC]-[S.148]

Urmilaben Anirudhhasinhji Jadeja v. ITO (2020) 420 ITR 226 / 273 Taxman 481 (Guj.HC)

Reassessment-Notice in name of dead person-Held to be not valid-Not a defect curable under S. 292B of the Act-Intimation by legal Representative that noticee was dead is not a participation in reassessment proceedings. [S.147, 292B, Art.226]

Allowing the petition the Court held that the settled legal principle is that a notice issued in the name of the dead person is unenforceable in law. The language employed in S. 292 of the Actis categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. The provisions of S. 292B are not applicable and framing of assessment against a non-existing entity or person goes to the root of the matter, which is not a procedural irregularity, but a jurisdictional defect, as there cannot be any assessment against a dead person. Mere intimation by the legal representative that the noticee is dead would not amount to participation in the reassessment proceedings.(R/SA No. 15310 of 2018 dt 27-08-2019)(AY. 2011-12)

31       { In Favor of Assessee } [(Karn.HC]-[S.148]

Mudhra Ltd. v. ACIT (2020) 273 Taxman 473 (Karn.HC)

Reassessment-Notice-Non-existing company-Substantive illegality and not procedural violation of nature adverted to in section 292-B, hence, not curable-Notice was quashed. [S. 142(1), 147, 292B, Art. 226]

The petitioner has challenged the notice dated 28-3-2018 issued under section 148 of the Act for the assessment year 2011-12 and the order of overruling the objections dated 29-11-2018 as well as the notice dated 11-12-2018 issued under section 142(1) of the Act on the ground that notice issued under Section 148 of the Act impugned herein, is without jurisdiction as the same was issued on the non-existing company and the same is nothing but change of opinion without any tangible material and moreover, beyond the period of limitation prescribed under the first proviso to Section 147 of the Act. Allowing the petition the court held that , assessee company was amalgamated with another company and thereby lost its existence, jurisdiction assumed by Assessing Officer to issue notice under section 148 to non-existing company was substantive illegality and not procedural violation of nature adverted to in section 292B and hence not curable. Therefore, notice issued under section 148 to non-existing company was to be quashed and set aside. (AY. 2011-12)

32       { In Favor of Assessee } [(Ker.HC]-[S.148]

Ashick Abraham v. PCIT (2020) 272 Taxman 538 / 191 DTR 282 / 315 CTR 723 (Ker.HC)

Reassessment-Jurisdiction of Assessing Officer-Proceedings initiated under section 148 shall be proceedings at stage of filing of return under section 139 of the Act-Directed the Assessing Officer to take appropriate decision within a period of one month of the receipt of the copy of judgement. [S. 124(2), 147, Art. 226]

Asessee shifted his residence to Ernakulam from Alappuzha in 2015 while PAN card of Ernakulam was issued on December 2019 Reassessment notice dated 30.12.2019 under section 148 was received by assessee. On 04.01.2020 i.e. within few days, assessee requested Income Tax Officer, Alappuzha for transfer of assessment proceedings to Ernakulam. As no action was taken the assessee filed the Writ petition. Allowing the petition the Court held that ITO should take a call on request under section 124(4) or any other provisions regarding jurisdiction of assessment or reassessment proceedings, by taking into consideration whether claim made by assessee would or would not fall under section 124(2), when original assessment under section 139 had been made or otherwise. Court observed that proceedings initiated under section 148 shall be proceedings at stage of filing of return under section 139 of the Act, however directed the Assessing Officer to take appropriate decision within a period of one month of the receipt of the copy of judgement. (AY. 2012-13)

33       { In Favor of Assessee } [(Mad.HC]-[S.148]

Abdul Azeez Haroon v. Dy.CIT(IT)(2020) 270 Taxman 216 / 194 DTR 306 / 317 CTR 610 (Mad.HC)

Reassessment-Non-Resident Indian-Notice issued by Madurai Income tax Officer when the assessee is staying in Shimoga Karnataka is held to be bad law and without jurisdiction. [S. 120, 127, 147 Art. 226]

Assessee was a non-resident Indian. Assessment was completed. Commissioner (IT) issued a reopening notice against assessee at its address at Madurai as PAN address of assessee was in Madurai and, accordingly, transferred the case of assessee to Assessing Officer at Madurai. On writ the Assessee contended that assessee was residing in Shimoga, Karnataka and thus, appropriate officer to assess assessee would be officer at Shimoga and impugned notice issued at Madurai was not valid. It was contended that assessee was staying in Madurai prior to period relating to assessment year 2011-12 and admittedly, no return of income was filed by him during his stay at Madurai as he had not earned any income liable to tax in that period. From assessment year 2010-11 onwards, assessee had shifted to Shimoga, Karnataka, carrying on business there and returns of income were filed from assessment year 2012-13 onwards at Shimoga, till date. These returns of income were processed and intimations were issued wherein address of assessee was stated to be Shimoga. Allowing the petition the Court held that on facts, appropriate officer to assess assessee was officer at Shimoga. Accordingly notice for reopening issued at its address at Madurai was not valid. (AY. 2011-12)

34       { In Favor of Assessee } [(Mad.HC]-[S.148]

Suvendra Kumar Panda v. ITO (2020) 121 taxmann.com 27 / 276 Taxman 171 (Mag)(Mad.HC)

Reassessment-Notice-Principal Officer-Notice issued in the name of Principal officer was quashed. [S.2(35(b), 147, Art. 226]

The Assessing Officer issued the notice u/s. 148 of the Act treating the petitioner as as Principal Officer of company. Petitioner challenged said notice on the ground that he had acted as a director of company for a short period and disclosed details of acting directors. Allowing the petition the Court held that since effective proceedings would not be possible with petitioner as Principal Officer impugned order treating petitioner as a Principal Officer was set aside. Followed ITO v. Official Liquidator (1977) 106 ITR 119 (APHC).(AY. 2011-12)

35       { In Favor of Assessee } [(APHC]-[S.147]

Madurai Power Corporation Pvt. Ltd. v. Dy. CIT (2020) 428 ITR 117 (APHC)

Reassessment-After the expiry of four years-No failure to furnish material facts-Reply to Audit to drop the proceedings-Purchase and sale of shares disclosed in the course of original assessment proceedings-Reassessment is held to be not valid. [S. 56(2)(vii)(a),147]

Allowing the petition the Court held that , the admitted facts were that , the assessee had disclosed all the facts before the Assessing Officer in one form or the other ; the assessment was reopened four years after its acceptance sans fresh material emanating subsequently, it was not the case of the Assessing Officer that the assessee had suppressed any income or any material facts ; the assessment was not reopened on the basis of any new material fact which came to light after the passing of the assessment order ; a reply came to be given to the audit objection by the Assessing Officer for dropping the objections raised. The notice of reassessment was not valid.(AY.2012-13)

36       { In Favor of Assessee } [(APHC]-[S.147]

Naval Kishore Khaitan v. PCIT (2020) 428 ITR 62 (APHC)

Reassessment-Notice issued after proper sanction-No return submitted in response to notice-Existence of alternate remedy-Writ to quash the notice is held to be not maintainable [S.148,151,Art. 226]

Dismissing the writ petition the Court held that the notice of reassessment had been issued with the approval of the Commissioner and it was in consonance of section 151 of the Act and without any apparent illegality. After issuance of notice under section 148, the first course was to file the return. Except for filing return, the assessee had taken all other courses such as filing of objections and invoking the writ jurisdiction of the court. Even if an order were passed after reopening pursuant to the notice, the assessee would have a statutory remedy as provided in the Act. The notice of reassessment could not be quashed.(AY.2012-13)

37       { In Favor of Assessee } [(Bom.HC]-[S.147]

Audhut Timblo v. ACIT (2020) 420 ITR 62 / 196 DTR 335 (Bom.HC)

Reassessment-After the expiry of four years-Block assessment-Addition deleted by CIT(A)-Notice to reassess the same is held to be not valid. [S. 132, 148,158BC, Art. 226]

In the year 2000, proceedings under S. 132 of the Act were undertaken and a search was conducted at the office and residential premises of the assessees. In pursuance of the search, a block assessment was carried out which resulted in the passing of order dated September 27, 2002 under S. 158BC of the Act. The assessees, appealed against the order dated September 27, 2002 to the CIT(A), who, by order dated July 13, 2006, set aside the order dated September 27, 2002, thereby deleting the addition. On September 13, 2006, the Department appealed against the order dated July 13, 2006 to the Appellate Tribunal. On October 18, 2006, the Department issued notice invoking the provisions of S. 148 of the Act stating that this very income of Rs. 10.33 crores had escaped assessment and therefore reassessment or reopening of assessment was proposed for the assessment year 2002-03. On a writ petition challenging the notice, the Court held that since there was full disclosure and in fact, the amount had even become the subject matter of the assessment both under S. 158BC and S. 143(3) there could have been no reason to believe that the income chargeable to tax had indeed escaped assessment. The notice of reassessment was not valid. (WP No. 166 of 2007 dt 27-11-2019)(AY. 2002-03)

38       { In Favor of Assessee } [(Bom.HC]-[S.147]

Gateway Leasing Pvt. Ltd v. ACIT (2020) 426 ITR 228 / 272 Taxman 255 / 194 DTR 57 / 317 CTR 9/ 272 Taxman 255 (Bom.HC)

Reassessment-After the expiry of four years-Bogus capital gains-Penny stocks-Information was received from the Investigation Wing of the Income Tax Department-The assessee disclosed the primary facts to the AO & also explained the queries put by the AO-It cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment-Reassessment is held to be not valid. [S. 45, 148]

Allowing the petition the Court held that the Dept's argument that though the assessee disclosed details of the transactions pertaining to purchase and sale of shares, it did not disclose the real colour / true character of the transactions and, therefore, did not make a full and true disclosure of all material facts which was also overlooked by the AO, is not correct. The assessee disclosed the primary facts to the AO & also explained the queries put by the AO. It cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment. Reassessment notice is held to be bad in law. (AY.2012-13)

39       { In Favor of Assessee } [(Bom.HC]-[S.147]

Anand Developers v. ACIT (2020) 271 Taxman 44 (Bom.HC)

Reassessment-After the expiry of four years-Housing project-No failure to disclose material facts-Reassessment is held to be not valid. [S.80(IB)(10)(f), 148, Art. 226]

Petitioner had submitted returns within prescribed period and assessment was completed u/ s. 143(3) of the Act. After prescribed period of 4 years, reassessment notice was issued to petitioner on ground that there was non-compliance on part of petitioner with respect to provisions of section 80IB of the Act, insofar as disclosure of some of sales were concerned. The assessee challenged the reassessment proceedings by filing writ petition and contended that in course of assessment proceedings before Assessing Officer, it had itself submitted that a few flats might had been allotted to persons in violation of section 80IB(10)(f) of the Act. Allowing the petition the Court held that disclosures were made in relation to sale transactions and it was even suggested that some of sale transactions might not be compliant with provisions section 8IB(10)(f) and no details were submitted by revenue as to material which was allegedly not disclosed either truly and fully and, thus, they had failed to make out any case that there was no true and full disclosures by petitioner. Since revenue had failed to establish this pre-condition even prima facie, reassessment was unjustified. (AY. 2012-13)

40       { In Favor of Assessee } [(Bom.HC]-[S.147]

Asian Satellite Broadcast Pvt. Ltd. v. ITO (2020) 428 ITR 327/195 DTR 153 (Bom.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts necessary for Assessment-Transfer of shares as gift-Change of opinion-Notice not valid. [S.45, 47, 148]

Court held that though the assessment order as such was silent on this aspect of gift of shares, the communications between the assessee and the Assessing Officer would clearly demonstrate that the assessee had disclosed all the primary facts regarding transfer of shares to E without any consideration and as a gift. In any case, it was a scrutiny assessment. It was clearly discernible that the basis for reopening the assessment were two letters of the Departmental authorities. While initially the contention of the assessee that such transfer of shares was a gift without consideration was accepted, subsequently the view was revised to treat the transfer of shares not as a gift and to tax the transaction on the market value of the shares. This was nothing but a change of opinion. Now it was not open to the Assessing Officer to take a second view on the same set of facts treating the earlier view as erroneous. The notice of reassessment after four years was not valid.(AY.2012-13)

41       { In Favor of Assessee } [(Bom.HC]-[S.147]

Sutara Ventures (P) Ltd. v. UOI (2020) 268 Taxman 367 (Bom.HC)

Reassessment-After the expiry of four years-Stock in trade-Debit of purchase of traded goods-In the original assessment proceedings profit and loss account was thoroughly scrutinised by the AO-No failure to disclose on part of assessee to produce all material particulars during original assessment proceedings-Notice for reassessment is held to be not valid.[S. 68, 148, Art.226]

Allowing the petition the Court held that in the original assessment proceedings the AO has examined the profit and loss account thoroughly and thereafter passed the order. As there is no failure to disclose on part of assessee to produce all material particulars during original assessment proceedings-Notice for reassessment is held to be not valid. (AY. 2012-13)

42       { In Favor of Assessee } [(Bom.HC]-[S.147]

Asian Satellite Broadcast Pvt. Ltd. v. ITO (2020) 428 ITR 327/ 195 DTR 153 /(2021) 276 Taxman 316 /318 CTR 305 (Bom.HC)

Reassessment-After the expiry of four years-Transfer of shares-Gift-No failure to disclose facts-Change of opinion-Reassessment notice is held to be not valid. [S.45, 148]

Allowing the petition the Court held that initially the contention of the assessee that such transfer of shares was a gift without consideration was accepted, subsequently the view was revised to treat the transfer of shares not as a gift and to tax the transaction on the market value of the shares. This was nothing but a change of opinion. It was quite apparent that the assessee had placed before the Assessing Officer during the assessment proceedings all the primary facts from which he made the inference. Now it was not open to the Assessing Officer to take a second view on the same set of facts treating the earlier view as erroneous. The notice of reassessment after four years was not valid.(AY.2012-13)

43       { In Favor of Assessee } [(Bom.HC]-[S.147]

PCIT v. Everlon Synthetics (P) Ltd. (2020) 269 Taxman 215 (Bom.HC)

Reassessment-One-time settlement with banker-Capital or revenue-Considered during original scrutiny assessment proceedings-Change of opinion-Reassessment is bad in law. [S. 4, 148, 260A]

Assessee was granted relief/waiver towards overdrafts and other facilities pursuant to one-time settlement with bank. Assessing Officer initiated reassessment proceedings against assessee to tax said relief alleging that it was revenue receipt. CIT(A) quashed the reassessment order, which was affirmed by the Tribunal. On appeal by revenue the Court held that during original scrutiny assessment proceedings, Assessing Officer had considered one-time settlement by assessee with its bankers as capital receipt and was not brought under taxation.Since reopening notice was not based on any fresh tangible material and same being issued on same facts which were considered earlier, it clearly amounted to mere change of opinion and, thus, was without jurisdiction. (AY. 2006-07)

44       { In Favor of Assessee } [(Bom.HC]-[S.147]

PCIT v. Everlon Synthetics (P.) Ltd. (2020) 424 ITR 232/269 Taxman 215/ 113 taxmann.com 442 (Bom.HC)

Reassessment-With in four years-Change of opinion-One-time settlement with banker-Capital receipt-Notice based on audit report-Reassessment is held to be not valid. [S.4, 148]

The assessee is engaged in the business of manufacture of Polyester and Texturised /Twisted yarn and management consultancy. In the original assessment proceedings the AO treated the waiver towards overdrafts and other facilities pursuant to one-time settlement with bank is not taxable. AO thereafter initiated reassessment proceedings and taxed the receipt. Tribunal quashed the reassessment proceeding. On appeal by the revenue the court held that , since reopening notice was not based on any fresh tangible material and same being issued on same facts which were considered earlier, it clearly amounted to mere change of opinion and, thus, was without jurisdiction. Order of Tribunal is affirmed. (AY. 2006-07)

45       { In Favor of Assessee } [(Cal.HC]-[S.147]

Calcutta Club Ltd. v. ITO (2020) 426 ITR 157/ 188 DTR 327/ 315 CTR 89/114 taxmann.com 560(Cal.HC)

Reassessment-After the expiry of four years-Mutual association-Interest from fixed deposits-A subsequent decision of the Supreme Court reversing the legal position existing at the time of passing of the assessment order could not be called an omission or failure on the part of the assessee to disclose fully and truly the material fact necessary for the relevant assessment-No failure to disclose material facts-Reassessment notice is held to be bad in law. [S. 4, 148]

The AO passed assessment orders accepting the assessee’s claim to exemption of interest on fixed deposits. After four years a notice of reassessment was served on the assessee. The recorded reasons by the AO stated that the reopening of assessment of the relevant assessment years was based on a subsequent judgment dated January 14, 2013, of the Supreme Court in the case of Bangalore club v. CIT(2013) 350 ITR 509 (SC) holding that income earned by way of interest from corporate members of a club is taxable income and does not come under the ambit of the mutuality principle. On a writ the Court held that the Department could not establish that the income in question which had allegedly escaped assessment was not disclosed during the course of original assessment proceeding or that it was not taken into consideration by the Assessing Officer at the time of passing of the assessment order under section 143(3) or that the proceeding for reassessment under section 147 of the Act was initiated within four years or that the recorded reasons specifically stated that there was any omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment in the relevant assessment year. A subsequent decision of the Supreme Court reversing the legal position existing at the time of passing of the assessment order could not be called an omission or failure on the part of the assessee to disclose fully and truly the material fact necessary for the relevant assessment. The notice of reassessment was not valid.(AY.2007-08, 200809)

46       { In Favor of Assessee } [(Cal.HC]-[S.147]

Selvel Transit Advertising Pvt. Ltd. v. CIT (2020) 420 ITR 100/ 196 DTR 139/ 317 CTR 679 (Cal.HC)

Reassessment-With in four years-Change of opinion-Not based on tangible material-Reassessment is held to be not valid. [S.80IA, 148, Art.226]

Assessment was completed u/s 143(3) of the Act. There after notice for reassessment was issued on the ground that the assessee is not fulfilling the criteria for deduction u/s 80IA of the Act. On writ the Court held that reassessment notice was issued not based on tangible material. The absence of reliable answer given by a Government functionary, being a notice under section 133(6) could be a cause for further enquiry but not tangible material having live link with the formation of belief. The letter did not support the contention of the Revenue. As such no material had been disclosed by the Revenue. All these led to the inevitable conclusion that there had been a change of opinion. The notice issued under section 148 to reopen the assessment under section 147 was set aside and all the proceedings pursuant thereto were quashed. (WP No. 1054 of 2011 dt 4-12-2019). (AY. 2006-07)

47       { In Favor of Assessee } [(DelhiHC]-[S.147]

Vedanta Ltd. v. ACIT (2020) 185 DTR 169 / 312 CTR 105 (DelhiHC)

Reassessment-After the expiry of four years-Failure to deduct tax deducted at source-Management consultancy fees-No omission or failure on assessee’s part to disclose all material facts relevant to original assessment proceedings-Notice for reassessment is held to be not valid. [S.40(a)(ia), 194J, 195]

Allowing the petition the Court held that the reasons for reopening made it clear that what triggered reopening of assessment was order passed by DCIT(IT) holding assessee to be an assessee in default for not deducting TDS from payment made to VRPLC towards management and consultancy fees. Proviso to s. 147 would stood attracted in present case since reopening was after four years and after initial assessment was u/s 143(3). Transaction regarding payment by assessee of management consultancy fees to VRPLC was indeed disclosed by assessee, not only in accounts but also in audit report. Reference was made by AO to TPO after forming an initial opinion about need for such a step-in terms of S. 92B. Without noticing that it was an international transaction, it was unlikely that AO would have made a reference to TPO. Further, TPO himself appeared to have discussed this aspect in his order and this led AO to again dealing with it in assessment order. Therefore, this was clearly not a case where there was any failure on assessee’s part to make a disclosure of all material particulars. There was no omission or failure on assessee’s part to disclose all material facts relevant to original assessment proceedings u/s 143(3).Accordingly, in terms of proviso to S. 147, assumption of jurisdiction by AO for reopening assessment was bad in law. (AY. 2010-11)

48       { In Favor of Assessee } [(DelhiHC]-[S.147]

CIT v. Delhi Kalyan Samiti (ITA No. 696 to 699/2015 dt 22-3 2016 (DelhiHC)

Reassessment-Notice-Additional ground-AO can issue the notice u/s. 143(2) only after filing of return of income in response to notice under section 148 of the Act-Prior issue of notice before such return is redundant therefore reassessment cancelled and quashed. [S.143(2) 148 151 292BB]

In response to the notice under section 148 of the Act the assessee filed the Income Tax Return dt. 21.8.2014. He filed objection on 30.08.2014. The said objections were overruled by the Assessing Officer on 16.12.2014 and final assessment order was passed u/s. 147/148 of the Act on 17.03.2015. The AO has issued notice u/s. 143(2) of the Act on 11.08.2014 whereas the assessee filed return of income in response to the notice u/s. 148 of the Act on 21.08.2014. That notice u/s. 143(2) of the Act is prior to the filing of the return which is illegal and against the provisions of law and is not sustainable in the eyes of law. Tribunal held that reassessment notice under section 143(2) must be issued only and only after filing return of income in response to notice under section 148. Prior issue of notice before such return is redundant therefore reassessment cancelled and quashed.

Following case laws relied

CIT v Jolly Fantasy World Ltd(2015) 373 ITR 530 (Guj.HC)

CIT v. Lalitkumar Bardia (2017) 84 taxmann.com 213[2018] 404 ITR 63 (Bom.HC)

CIT v. Laxman Das Khandelwal [2019] 417 ITR 325 (SC)

ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC)

PCIT v. Paramount Biotech Industries Ltd /[2017] 398 ITR 701 (Delhi)

Alpine Electronics Asia Pte. Ltd. v. DGIT (2012) 341 ITR 247 (DelhiHC)

49       { In Favor of Assessee } [(DelhiHC]-[S.147]

Vanita Sanjeev Anand v. ITO (2020)422 ITR 1/ 189 DTR 198/ 314 CTR 608 / 271 Taxman 105 (DelhiHC)

Reassessment-Return submitted-Notice on ground that returns had not been submitted-Loan transactions accepted in original assessment-Notice seeking to assess outstanding liability as income from other sources-Held to be not valid. [S. 56, 148, Art.226]

Allowing the petition the Court held that issue of notice on ground that returns had not been submitted when the Loan transactions were accepted in original assessment issue of notice seeking to assess outstanding liability as income from other sources is held to be not valid. (AY. 2011-12)

50       { In Favor of Assessee } [(DelhiHC]-[S.147]

Tropex Promotion and Trading Ltd. v. CIT (2020)423 ITR 510 (DelhiHC)

Reassessment-Share capital-Notice issued based on disallowances made in for subsequent year-No information available for specific assessment year-Notice is held to be invalid. [S.68, 147(b), 148]

Allowing the appeal the Court held that there was no information available with the Assessing Officer specific to the assessment year. The reasons for reopening the assessment did not make any reference whatsoever to any “information” in the possession of the Assessing Officer that persuaded him to form the belief that income had escaped assessment. The only “information” available with him was the assessment order for the assessment year 1987-88, and no additions were made to the income of the assessee then. If that was the only basis for the reopening it was not permissible. The jurisdictional requirement of S. 147(b) as it stood at the relevant time was not fulfilled. The initiation of reassessment under S. 147 was invalid. The additions made by the AO under S. 68 on account of the additional share capital amount was to be set aside.(AY.1986-87)

51       { In Favor of Assessee } [(Guj.HC]-[S.147]

Kakaria Housing and Infrastructure Ltd. v. Dy. CIT (2020)425 ITR 103 (Guj.HC)

Reassessment-After the expiry of four years-Audit objection-Not accepted by the Assessing Officer-Borrowed satisfaction-No failure to disclose material facts-Notice is held to be bad in law. [S.148, Art.226]

Allowing the petition the Court held that on a plain reading of the reasons recorded, it was evident that all the facts were already before the Assessing Officer at the time of scrutiny assessment and no fresh material had been relied upon by him for the purpose of reopening the assessment. The reasons for the notice of reassessment revealed that the Audit Department had raised objections in respect of both the issues on which the assessment was sought to be reopened. On both the counts, the Assessing Officer did not accept the objections and gave his explanation for not accepting them. However, the audit department found the reply of the Assessing Officer not tenable. Evidently, therefore, the formation of belief that income chargeable to tax had escaped assessment was not that of the Assessing Officer, but was based upon the borrowed satisfaction of the audit department. The notice of reassessment was not valid.(AY.2012-13)

52       { In Favor of Assessee } [(Guj.HC]-[S.147]

Jayesh T. Kotak v. Dy. CIT (2020) 424 ITR 435/ 273 Taxman 525 / 116 taxmann.com 426/ 195 DTR 277 / 317 CTR 406 (Guj.HC)

Reassessment-After the expiry of four years-Deemed dividend-No obligation to disclose when the assessee was not benefitted.[S.2(22)(e), 148, Art. 226]

Allowing the petition the Court held that, in the absence of any finding having been recorded by the Assessing Officer that any income had accrued in favour of the assessee, there was no obligation cast upon the assessee to disclose such transactions. Under the circumstances, in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the reopening of the assessment beyond a period of four years from the relevant assessment was illegal. The notice issued under section 148 for reopening the assessment under section 147 and all the proceedings pursuant thereto were to be quashed and set aside.(AY.2008-09)

53       { In Favor of Assessee } [(Guj.HC]-[S.147]

Asian Tubes Pvt. Ltd. v. Dy. CIT (2020) 425 ITR 613 (Guj.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts-Merely because the Assessing Officer did not record such acceptance in the assessment order that would not be a ground to conclude that income had escaped assessment-Reassessment notice is held to be not Valid. [S. 36(1)(iii), 40(a)(ia), 148]

Allowing the petition the Court held that the reasons recorded with regard to applicability of S. 40(a)(ia) of the Act had already been considered by the Assessing Officer during the course of assessment proceedings. Similarly, details of bonus and remuneration paid to the directors and details with regard to payment of dividend and profits to the directors of the assessee were also furnished during the course of the assessment, and therefore, the question of disallowance in view of S. 36(1)(ii) of the Act would not arise. The details of tax deducted at source were also furnished during the course of assessment proceedings. In such circumstances, when the entire material had been placed by the assessee before the Assessing Officer, and he had accepted the view canvassed by the assessee, merely because he did not record such acceptance in the assessment order that would not be a ground to conclude that income had escaped assessment. The notice of reassessment was not valid.

54       { In Favor of Assessee } [(Guj.HC]-[S.147]

Royal Infrastructure v. Dy. CIT (2020) 425 ITR 491 (Guj.HC)

Reassessment-After the expiry of four years-No failure to disclose material facts-Form of return not requiring specification of persons mentioned in Section-Assessing Officer not examining the clauses-Reassessment notice is held to be not valid. [S.80IB(10)(e) & (f), 148,Art. 226]

The assessee submitted its return of income for the assessment year 2012-13 on August 4, 2012 computing the gross total income and claiming deduction under S. 80IB. The assessee filed an audit report under section 44AB of the Act in forms 3CB and 10CCB being the audit report for claiming deduction under section 80-IB of the Act. Thereafter, the case of the assessee was selected for scrutiny assessment. Deduction under section 80-IB(10) was allowed. After four years notice of reassessment was issued on the ground that there was no full and true disclosure of facts while claiming deduction under section 80IB(10). On a writ the Court held that during the course of the original scrutiny proceedings, the Assessing Officer called for various details from the assessee, including details of the purchasers, their names, addresses with permanent account numbers etc., which were duly furnished by the assessee. When the assessee had disclosed all the material facts necessary for his assessment, but the Assessing Officer failed to consider the claim for deduction under section 80IB(10) in the context of clauses (e) and (f) thereof, it could not be said that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for its assessment. The notice was not valid.(AY.2012-13)

55       { In Favor of Assessee } [(Guj.HC]-[S.147]

R. Kantilal and Co. v. ITO (2020) 424 ITR 92 (Guj.HC)

Reassessment-After the expiry of four years-There was no failure to disclose material facts-Mere change of opinion-Notice s held to be not valid. [S.148]

Allowing the appeal the Court held that during the course of scrutiny assessment, the Assessing Officer had applied his mind to this very aspect and had called for details from the assessee in respect of the amount of Rs. 46,00,000 deposited with the police station and after considering the explanation tendered by the assessee did not make any addition in that regard. Evidently, therefore, the Assessing Officer sought to reopen the assessment on a mere change of opinion and hence, even on this count the assumption of jurisdiction on the part of the Assessing Officer was bad in law.(AY.2011-12)

56       { In Favor of Assessee } [(Karn.HC]-[S.147]

CIT v. I.G. Petrochemicals Ltd. (2020) 185 DTR 225 / 314 CTR 857 (Karn.HC)

Reassessment-After the expiry of four years-Unabsorbed depreciation-No failure to disclose material facts-Reassessment is held to be bad in law. [S. 32, 148, 149]

That the original assessment was completed under S. 143(3) of the Act. In the course of re-assessment proceedings, the AO disallowed the depreciation and other expenses in respect of running of a boiler and turbine while computing the income under the head 'other sources' on the ground that there were strong indication that neither the boiler nor the turbine were ready for the use up to 31.03.1992. He also held that agreements entered into between the respondent-company and M/s. Mysore Petrochemicals for hiring out the boiler and turbine and the evidence produced in support of the same, were generated with the sole purpose to prove that boiler and turbine have been hired out. Accordingly, AO determined the total income of the assessee at Rs.1,42,36,688/-under the head 'income from other sources. CIT(A) held that the re-assessment done by the AO is liable to be annulled. Tribunal affirmed the order of CIT(A). On appeal the High Court affirmed the order of Tribunal. (AY. 1992-93)

57       { In Favor of Assessee } [(Karn.HC]-[S.147]

P. Hemamalini Maiya v. ACIT (2020) 421 ITR 79 (Karn.HC)

Reassessment-Audit objection-No new material to show that income had escaped assessment-Notice is not valid.[S.148, Art. 226]

Allowing the petition the Court held, that it is well-settled that no reassessment/reopening can be undertaken on the basis of mere audit objections or query raised by the internal auditors of the Department. The notice did not indicate any independent application of mind by the Assessing Officer. As could be seen from the records, the audit query vis-a-vis the reply of the Assessing Officer made it clear that the Assessing Officer was of the opinion that the transaction in question related to a capital asset and the tax paid on capital gains in respect thereof had been accepted to be correct. This issue was examined and analysed by the Assessing Officer multiple times. The Assessing Officer had no "reason to believe" any escapement of income to assessment. This was a clear case of change of opinion. Hence, assumption of jurisdiction by the Assessing Officer under section 147 could not be sustained.(AY. 2008-09)

58       { In Favor of Assessee } [(Mad.HC]-[S.147]

PCIT v. URC Construction (P) Ltd. (2020) BCAJ-December-P 53 (Mad.HC)

Reassessment-After the expiry of four years-Housing project-Completion certificate issued within four years from date of obtaining permission-Re assessment is held to be bad in law. [S. 80IB(10), 148, Art. 226]

Assessee-company was engaged in the business of real estate development. Assessee floated a residential scheme comprised of several residential plots and an approval was obtained from local authority for construction of an office building for such scheme on 16.3.2005. Thereafter, assessee had obtained approval for construction of such housing project from Godawari Urban Development Authority (GUDA) on 6-2-2008. Assessee completed the project and got building use permission by concerned authority on 31.3.2012. Accordingly, he claimed deduction under section 80IB(10) on housing project which was granted. After four year, a reopening notice was issued against assessee on ground that approval granted by local authority on 16-3-2005, was first approval and, hence, housing project was deemed to be approved on that date, and consequently, since project was completed on 31-3-2012, i.e beyond period of four years from date of approval, assessee was not entitled to deduction. On writ the Court held that since approval granted on 16-3-2005 by local authority was only for construction of an office building and not for developing and building housing project and approval for a housing project on subject land was granted for first time, only on 6-2-2008 by concerned authority, project being completed on 31-3-2012, was well within period prescribed for completion of project for purpose of availing benefit of deduction under section 80-IB(10).Therefore, impugned reopening notice issued against assessee was unjustified. (AY. 2011-12)

Sheetal Infrastructure (P) Ltd. v. ACIT (2020) 270 Taxman 316 (Guj.HC)

59       { In Favor of Assessee } [(Mad.HC]-[S.147]

International Flavours and Fragrances India Pvt. Ltd. v. Dy. CIT (LTU)(2020)425 ITR 450 / 315 CTR 448/ 191 DTR 191 (Mad.HC)

Reassessment-After the expiry of four years-Manufacture-Change of opinion-Based on the basis of commission issued-Held to be bad in law and impermissible.[S.2(29BA),80IB,80IB,131 (1)(d), 148, Central Excise Act, 1944, S.2(f)]

The assessment of the assessee was completed u/s 143(3) of the Act. After a period of four years the notice under S. 148 of the Act was issued to reopen the assessment. The assessee filed a writ petition against such notice. During the pendency of the writ petition, another notice under section 148 was issued to reopen the assessment for the assessment year 2009-10. The reasons recorded were that the activity carried out by the assessee did not amount to manufacture and hence the claim made by the assessee under S. 80IB(4) was to be disallowed. It was the contention of the assessee that under the Central Excise Act, 1944 the Excise Department had accepted that the activity undertaken by it amounted to manufacture and refunded the amounts payable for the respective financial years. The Deputy Commissioner rejected the objections raised by the assessee to the reopening of the assessments. On writ the Court held that whether the activity undertaken by the assessee amounted to manufacture or not, was deliberated upon before the respective assessment orders were passed. The assessee was specifically asked to explain the process of manufacture for claiming the benefit of deduction under S. 80IB, and the assessee had furnished all the details. It was only thereafter that the assessments were completed for the respective assessment years. The Department had not denied that the assessee had truly and fully disclosed all the materials that were required for completing the assessments. Therefore, a change of opinion based on the report of the Asst.Commissioner, Jammu under S. 131 could not amount to failure on the part of an assessee to truly and fully disclose information or documents required for the purpose of completing the assessments. The reopening of the assessments to deny the deductions under S. 80IB was without jurisdiction.(AY.2009-10, 2010-11)

60       { In Favor of Assessee } [(Mad.HC]-[S.147]

PCIT v. Vijayeshwari Textiles Ltd. (2020) 275 Taxman 560 / 196 DTR 126 (Mad.HC)

Reassessment-After theexpiry of four years-Product development expenditure-Capital or revenue-Reassessment is held to be bad in law. [S.37(1)]

Assessee spent certain amount towards product development expenditure which was claimed as revenue expenditure. After four years, Assessing Officer reopened assessment on ground that assessee had shown only a portion of product development expenditure under profit and loss account and, therefore, assessee was entitled to claim income-tax benefit only to that extent and, hence, he disallowed remaining amount. Assessee contended that the amount debited in profit and loss account was relating to previous assessment year, which was 1/3rd of product development expenses for which it was amortizing in relevant year. CIT(A) quashed the reassessment order which was affirmed by the Appellate Tribunal. On appeal by the revenue the Court held that there was no justifiable reason to reopen assessment under after four years, further since product development expenditure incurred by assessee was revenue in nature, there was no error in deduction claimed by assessee though said expenditure was to be amortized over period of three years as per accounting practice adopted by company. (AY. 2007-08)

61       { In Favor of Assessee } [(Mad.HC]-[S.147]

Mobis India Ltd. v. Dy.CIT, LTU-II (2018) 101 CCH 0475 /(2020)421 ITR 463 (Mad.HC)

Reassessment-Audit objection-Depreciation--Business or commercial rights of similar nature-Notice of reassessment based solely on audit objection is held to be not valid. [S. 32, 148]

The assessee acquired the customer care parts business by a business transfer agreement dated April 26, 2007. The assessee claimed that it was entitled to depreciation on the vendor and dealer network and the details of depreciation were disclosed in the tax audit report annexed with the return of income. Submissions were made on various dates along with written submissions, which were filed before the AO to justify its claim to depreciation on the vendor and dealer network and goodwill. The assessment was completed under S. 143(3) of the Act. Subsequently there was an audit objection raised by the audit party of the Comptroller and Auditor General regarding the claim for depreciation on the dealer and vendor network and goodwill. The AO issued a notice of reassessment. On a writ allowing the petition the Court held that the AO was justified in holding that the vendor and dealer network rights and the goodwill acquired by the assessee pursuant to the business transfer agreement dated April 26, 2007, would qualify for depreciation under section 32 and the assessment was completed considering the claim for depreciation after seeking for clarification from the assessee. The reasons assigned by the AO to reopen the assessment was nothing but a clear case of change of opinion. It was manifestly clear that the AO had issued the reassessment notice on the ground of direction issued by the audit party. The notice was not valid.(AY. 2010-11)

62       { In Favor of Assessee } [(Mad.HC]-[S.147]

CIT v. Neyveli Lignite Corporation Ltd. (2020) 273 Taxman 322 / 193 DTR 6 (Mad.HC)

Reassessment-Depreciation-Water supply and drainage-Allowed depreciation at 15%-Issue was subject matter of revision and considering the reply the revision proceedings were dropped-Reassessment is held to be not valid. [S. 32, 148, 263]

The assessee had claimed depreciation at rate of 15 percent on water supply and drainage which was allowed. The assessment was completed u/s 143 (3) of the Act. Assessing Officer had raised an identical query and thereupon he had accepted assessee's explanation and, claim of excess rate of depreciation was restricted to non-productive assets only. It was also found that for very same reason, Commissioner had issued notice under section 263 but, after considering assessee's reply, said proceedings were dropped. Tribunal quashed the reassessment proceedings. On appeal by revenue the court held that when reasons for reopening of assessment were subject matter of proceedings under section 143(3) or proceedings under section 263, once again, for very same reasons, power under section 147 could not be invoked. (AY. 2008-09)

63       { In Favor of Assessee } [(Mad.HC]-[S.147]

S. Kamarasu v. ITO (2020) 275 Taxman 392 (Mad.HC)

Reassessment-Guideline value-Cannot be the basis for reopening of assessment. [S. 45, 69, 148, Art. 226]

Assessee purchased a property for a sale consideration of Rs. 1.5 crores. Guideline value of property was Rs. 1.95 crores.Assessing Officer considering reply of assessee regarding difference in actual sale consideration and guideline value completed assessment under section 143(3) of the Act. Reassessment notice was issued which was challenged the Court held that since recitals in sale deed evidenced that property was purchased at Rs. 1.5 crores, guideline value shown in sale deed could not be construed to be an actual sale value, and therefore, consequential decision that assessee had under quoted sale amount in returns, could not be accepted. (AY. 2009-2010)

64       { In Favor of Assessee } [(Mad.HC]-[S.147]

CIT v. City Lubricants Pvt. Ltd. (2020) 428 ITR 109/ 195 DTR 457 (Mad.HC)

Reassessment-With in four years-Capital gains-Advance received for transfer of capital asset-Reassessment is held to be not valid-Joint development agreement-The amount has not accrued-Addition could not be made even on merit. [S. 2(47)(v), 45, 56,148]

Court held that the reasons for reopening were furnished to the assessee, a reading of which showed that the Assessing Officer proposed to apply section 2(47) of the Act and observed that the assessee had not admitted the income in its return and offered it to tax. The issue pertaining to the amount of advance received by the assessee, namely, Rs. 9 crores was never the subject matter of the reopening proceedings. This was sufficient to hold the assessment order dated March 25, 2015 to be a nullity. Court also held that even on the merits the joint development agreement did not take off and ultimately, in February 2015, the developer addressed the assessee to return the amount of Rs. 9 crores before March 31, 2015. Even at that point of time, the agreement was not cancelled and the power of attorney granted to the developer remained in force. Therefore, by no stretch of imagination, could the sum of Rs. 9 crores in the hands of the assessee be treated to be a windfall gain as it did not accrue to the assessee as a result of circumstances outside its control. Therefore, the finding of the Assessing Officer was incorrect. There was no finding rendered by the Assessing Officer that the sum of Rs. 9. Therefore, on the facts, the Assessing Officer could not have held that this was on account of a windfall gain to be brought to tax under the head Income from other sources.(AY.2007-08)

65       { In Favor of Assessee } [(Mad.HC]-[S.147]

PCIT v. Shree Laxmi Jewellery Pvt. Ltd. (2020) 428 ITR 379 (Mad.HC)

Reassessment-With in four years-Change of opinion-Speculative transaction-Business of manufacturing and trading of bullion and jewellery-Review of decision is impermissible-Business loss-Held to be not valid. [S.43(5), 148]

Dismissing the appeals of the revenue the Court held that the reopening, based upon a change of opinion or a review of the decision taken by the Assessing Officer was impermissible. The Tribunal was right in setting aside the order of reassessment.(AY.2009-10)

66       { In Favor of Assessee } [(Mad.HC]-[S.147]

ITO v. MBI KITS International Rep. by its Partner Sri. D.Chandrasekar (2020) 186 DTR 29 / 315 CTR 709 (Mad.HC)

Reassessment-With in four years-Commercial production-Every non-disclosure of material facts will not or cannot be a justifiable reason for reopening an assessment-What was required to be considered is that , substance over form.-Order of single judge is affirmed.[S.10B, 148, Art.226]

Assessment was completed u/s.143(3), Single Judge quashed the reassessment notice. On appeal by the revenue, Division Bench of High Court,affirmed the order of single judge. Court held that thelearned Single Bench rightly concluded that every non-disclosure of material facts will not or cannot be a justifiable reason for reopening an assessment. Court held that what was required to be considered is that , substance over form. Court held that he learned Single Bench was perfectly right in allowing the writ petition which had been done after thorough examination of the facts and the legal position. In our considered view the revenue has not made out any grounds to interfere with the order passed by the learned Single Bench. (AY. 2010-11)(WP. 2019 dt 24-06-2019)

67       { In Favor of Assessee } [(Karn.HC]-[S.148]

Essilor India P. Ltd v. ACIT (2020) 187 DTR 430 / 315 CTR 199 (Karn.HC)

Reassessment-Notice issued u/s 92CA based on the reassessment notice was challenged as the objection to reassessment notice was not disposed off-Directed to dispose the objection and proceedings u/s 92CA was stayed. [S. 92CA, 148, Art. 226]

Allowing the petition the Court held that without disposing the objection raised by the petitioner referring the matter to TPO being premature hence the court direcreted the revenue to dispose the preliminary objection, meantime proceedings under section 92CA was stayed. (AY. 2015-16)

68       { In Favor of Assessee } [(Mad.HC]-[S.148]

Seshasayee Paper and Boards Ltd. v. Dy.CIT (2020) 269 Taxman 120 (Mad.HC)

Reassessment-Objections raised and the Assessing Officer has to pass reasoned order-Challenge of notice is held to be not valid. [S.147, Art. 226]

Notice for reopening assessment was issued on assessee. Assessee had already been furnished with reasons for reopening. The assessee filed writ petitions against the issue of notices. Dismissing the petition the Court held that assessee was bound to raise objections against reasons for reopening and thereafter, Assessing Officer had to pass a reasoned order and such a course of action being yet to be completed, writ petitions could not be filed at instant stage. (AY.1999-2000, 2001-2002, 2002-03)

69       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.148]

Flovel Energy Pvt. Ltd. v. ACIT (2020)77 ITR 441 (Delhi)(Trib.)

Reassessment-Notice-Reply stating that original return filed should be treated as return filed in response to notice u/s 148-Postal receipt is filed-Neither notice u/s 143(2) is issued nor assessment completed u/s 144 of the Act nor interest charged u/s 234A-Reassessment is held to be not valid. [S.139, 143(2), 144, 147, 234A]

Tribunal held that the notice under S. 148 was issued on the same date, the objection of the assessee for such reopening was disposed of by the AO passing a speaking order on the same date, the reassessment orders for both the years were passed on the same date and the CIT(A) also had passed the appellate orders for both the years separately on the same date. Therefore, it could not be said that the assessee had filed the reply for treating the earlier return as the return in response to the notice under S. 148 only for the AY. 2010-11 and not for the AY. 2011-12, especially when the postal receipts for both the speed posts were also on the same date. Since the assessee filed the letter stating that the return filed originally may be treated as return filed in response to the notice under S. 148 and since the notice under S. 143(2) was not issued within the statutory period and since the assessment was not completed under S. 144 nor any interest under S. 234A charged which indirectly proved that the assessee, in fact, had filed the letter stating that the return filed originally may be treated as return filed in response to the notice under S. 148. Therefore, the assessment order passed by the AO was not in accordance with law and had to be quashed.(AY.2011-12)

70       { In Favor of Assessee } [(Mad.HC]-[S.149]

N. Illamathy (Smt.) v. ITO (2020) 275 Taxman 25 / 195 DTR 49 / 317 CTR 543 (Mad.HC)

Reassessment-Time limit for notice-Direction of CIT(A)-Reassessment barred by limitation cannot be reopened-Reassessment was quashed. [S.143(1), 149(1)(b)]

Assessee individual filed its return of income which was processed under section 143(1). Later on, during assessment proceedings for assessment year 2002-03, Commissioner (Appeals) noted that a sum received by assessee from a firm in the year 1996 was to be admitted to assessee's income as commission received by assessee for assessment year 1997-98. Pursuant to the same, Assessing Officer issued a reopening notice dated 22-12-2005 proposing to reopen assessment for relevant assessment year 1997-98 solely for abovesaid reason assigned by Commissioner (Appeals). Reassessment was affirmed by CIT(A) and also Appellate Tribunal. On appeal it was contended that said reopening was barred by limitation. Allowing the appeal the Court held that assessment for the assessment year 1997-98 could not be reopened beyond 31-3-2004 in terms of amended provisions of section 149(1)(b) as applicable at relevant time. Accordingly reassessment notice dated 20-10-2005 was unjustified and the same was to be set aside. (AY. 1997-98)

71       { In Favor of Assessee } [C(T)(Chd.)(Trib. ]-[S.147]

Sanjay Singhal (HUF) v. Dy.CIT (2020) 81 ITR 377 (Chd.)(Trib.)

Reassessment-Search and seizure-information received from investigation wing-Not independently verified from record-Correct course of action would have been to proceed under section. 153C and not under section 147-Reassessment was quashed. [S. 132, 148,153C]

Allowing the appeal the Tribunal held that the AO r had acted on the basis of the information received from the Investigation Wing of the Department and had not independently verified from the record available to him in the form of the return filed by the assessee. So there was only suspicion of some income having escaped assessment which could not by itself be sufficient to sustain the action under S. 147 read with S. 148 of the Act. The reopening in the assessee’s case by the Assessing Officer was merely based on the borrowed satisfaction drawn from other cases which was not sufficient for the purposes of sustaining any addition made under S. 147 read with S. 148. If any action was required to be done on the basis of certain documents found from other persons during the course of search the assessment could have been framed under S. 153C but no such action was taken in the assessee’s case. Rather the action was taken indirectly under S. 147 read with S. 148 of the Act. If any material was found relating to the assessee during the course of search on third parties the correct course of action would have been to proceed against the assessee under S. 153C and there was no justification for the Assessing Officer to initiate the proceedings under S. 147 read with S. 148. The order of the AO was set aside and quashed.(AY.2011-12 to 2013-14)

72       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.147]

Lionbridge Technologies (P.) Ltd. v. ACIT (2020) 184 ITD 61 (Mum.)(Trib.)

Reassessment-Internal audit objection-Reimbursement of expenses-Failure to deduct tax at source-Reassessment is held to be not valid-90 days time period permitted under Rule 34(5) for pronouncing order was to be computed by deducting Covid-19 pandemic lockdown period. [S.40(a)(ia), 148, 195, 255, ITATR. 34(5)]

Tribunal held that reasons for re-opening did not point out as to how the assessee failed to disclose fully and truly all material facts necessary for his assessment. Tribunal also held that internal audit objection had become prime consideration to believe that an income had escaped assessment resulting into reopening of assessment proceeding and not the decision of AO on merit. Accordingly the reassessment was quashed. Tribunal also held that 90 days time period permitted under Rule 34(5) for pronouncing order was to be computed by deducting Covid-19 pandemic lockdown period. (AY. 2008-09)

73       { In Favor of Assessee } [C(T)(Vishakha)(Trib. ]-[S.147]

Reddipalli Srinivas v. ACIT (2020)77 ITR 59 (SN)(Vishakha)(Trib.)

Reassessment-After the expiry of four years-Survey-Difference of labour charges-No failure to disclose material facts-Reassessment is held to be not permissible.[S.133A, 148]

Tribunal held that there was a survey and subsequently, assessment was completed on account of difference of labour charges amounting to Rs. 1,59,53,033 and this aspect was duly considered during the course of assessment proceedings. The AO nowhere said that there was a failure on the part of the assessee nor what was the new material came to his notice for reopening beyond the four years. Under these facts and circumstances of the case, if the AO wanted to reopen the assessment beyond the four years, he had to satisfy the conditions laid down by the proviso to S. 147. It is the duty of the AO to establish that there is a failure on the part of the assessee to disclose fully and truly all material facts to complete the assessment. The same aspect of difference of labour payments which had already been considered and it was not permissible to reopen the very same assessment after four years. Thus the notice issued by the AO under S. 148 beyond four years was not valid and therefore reassessment was quashed.(AY.2010-11)

74       { In Favor of Assessee } [C(T) (Mum.)(Trib. ]-[S.147]

Ashapura Minichem Ltd. v. DCIT (2020) 81 ITR 111 / 184 ITD 278 (Mum.)(Trib.)

Reassessment-Under invoicing-Cash credits-Report of commission-Reassessment proceedings initiated merely on basis of report of a Commission appointed by Central Government that there was under invoicing of exports-Held to be bad in law-Pronouncement of order-Period during which lockdown was in force in country due to COVID 19 pandemic was to be excluded. [S.68, 148, 255, ITAT R. 35]

Assessment was completed under section 143(3) of the Act. On basis of report given by a commission appointed by Central Government, Assessing officer initiated reassessment proceedings on the ground that there was under invoicing of exports. On appeal the Tribunal held that merely based on report submitted by said Commission appointed by Central Government. Reassessment is held to be not justified. Tribunal also held that period during which lockdown was in force in the country due to COVID 19 pandemic was to be excluded for purpose of computing time set out for pronouncement of judgment by Tribunal i.e. within 90 days from date of hearing. (AY. 2008-09)

75       { In Favor of Assessee } [C(T)(Ahd.)(Trib. ]-[S.147]

Vipul Virendrakumar Patel v. ITO (2020)82 ITR 32 (SN)  (Ahd.)(Trib.)

Reassessment-Cash deposit in bank in excess of Rs. 10 lakhs-Salary income lower than the threshold limit-Information available with Assessing Officer vague and without any proper identification and quantification of escaped income-Reassessment is held to be not valid. [S.148]

The Tribunal held that , salary income lower than the threshold limit. Information as regards deposit of cash in bank excess of Rs 10 lakhs is vague hence information available with Assessing Officer vague and without any proper identification and quantification of escaped income. Section 147 enables the Assessing Officer to compel the assessee to file return only in the event of escapement of income. Without having cogent reasons for the belief towards escapement, even a person who has not filed the return cannot be forced to file a return by invoking S. 147. Accordingly the reassessment is held to be not valid. (AY.2010-11)

76       { In Favor of Assessee } [C(T)(Ahd.)(Trib. ]-[S.147]

Dy. CIT(E) v. Gandhinagar Urban Development Authority (2020)81 ITR 51 (SN)/ 207 TTJ 17 (UO)  (Ahd.)(Trib.)

Reassessment-Charitable Trust-On the basis of same set of facts, which were already available on record-Reassessment is not sustainable.-Delay of 212 days in filing of cross objection is condoned. [S.2(15), 11, 12AA,148, 253(5)]

The Tribunal held that the Assessing Officer recorded a finding that after discussion and from the data made available during the course of hearing nothing adverse had been found. All the information called for relating to the important activities, and income claimed under section 11 was submitted before the Assessing Officer for verification as were the books of account supported by bills and vouchers. In the reasons recorded there was no mention of adverse facts coming to light in order to reopen the original assessment, nor of any information or fresh evidence in the possession of the Assessing Officer. The assessment was reopened merely on the basis of the same set of facts, which were already available on record. Therefore, the action of the Assessing Officer in reopening of the assessment was wrong and null and void. Delay of 212 days in filing of cross objection is condoned. (AY.2009-10, 2010-11)

77       { In Favor of Assessee } [C(T)(Ahd.)(Trib. ]-[S.147]

Tyrone Patrick Lemos v. ITO (2020) 84 ITR 56 (SN)  (Ahd.)(Trib.)

Reassessment-Not making any additions on grounds initially raised in notice or in reasons recorded-Not entitled to make additions on other grounds-Sanction-Consolidated approval in group case without recording qua each case-Reassessment invalid-Legal ground on jurisdiction can be raised first time before Appellate Tribunal. [S. 2(22)(e), 148(2), 151, 254(1)]

Tribunal held that no additions were made on the grounds taken by the Assessing Officer towards formation of belief and the addition was eventually made under the deeming fiction of section 2(22)(e). No relevant material was referred to by the Assessing Officer for applicability of section 2(22)(e) of the Act at the time of recording the reasons. The applicability of section 2(22)(e) was discovered at a subsequent stage in the course of assessment. Thus, it was not permissible for the Assessing Officer to supplement the reasons and make additions on the contours of section 2(22)(e) of the Act for which no reasons were recorded. The additions made by the Assessing Officer towards deemed income under section 2(22)(e) of the Act, being extraneous to the reasons recorded, had to be struck down on this score. Followed CIT v. Mohmed Juned Dadani(2013) 355 ITR 172 (Guj.HC) Ram Bai v. CIT (1999) 236 ITR 696 (SC) Hindustan Lever Ltd. v. R. B. Wadkar, Asst.CIT (No. 1)(2004) 268 ITR 332 (Bom.HC) and East Coast Commercial Co. Ltd. v. ITO (1981) 128 ITR 326 (CalHC). Tribunal held that the approval memo given by the Joint Commissioner noted the name of the assessee with many other assessees and granted a consolidated approval for action under section 147 of the Act stating “your proposal for reopening the above cases under section 147 of the Act is hereby approved”. Any reference to formation of “satisfaction” of the Joint Commissioner prior to approval, even in brief, was missing. Hence, in the absence of express satisfaction recorded by the Joint Commissioner while granting approval under section 151 of the Act, the consequential action of the Assessing Officer under section 147 could not be upheld. This apart a consolidated approval memo of multiple assessees without recording satisfaction qua each individual case raised serious doubt on the plausibility of implicit satisfaction for each case as contemplated in section 151 of the Act. As regards the legal objection raised by the assessee on the validity of assumption of jurisdiction under section 147 read with section 151 of the Act and consequent additions carried out under section 2(22)(e) of the Act within the framework of the provisions of section 147 of the Act struck to the root of the matter and therefore, could be challenged before the Tribunal even if not raised or not argued before the lower authorities. Accordingly the proceedings under section 147 / 148 of the Act were void ab initio and the additions made under section 2(22)(e) of the Act bad in law. (AY. 2013-14)

78       { In Favor of Assessee } [C(T)(Ahd.)(Trib. ]-[S.147]

Sumer S. Sanghvi v. ACIT (2020) 78 ITR 20 (SMC)  (Ahd.)(Trib.)

Reassessment-Reassessment-After the expiry of four years-Beforesix years-Reasons vague and inconclusive-Reassessment not valid. [S.148]

Tribunal held that notice under section 148 was issued to the assessee after expiry of four years from the end of the relevant assessment year but before six years. This notice would be within limitation if the Assessing Officer had made out a case that income exceeding rupees one lakh had escaped assessment. No such finding or observation or reference had been made in the reasons. The Assessing Officer had observed that according to information received from the ITO the assessee carried out transaction in shares and securities with GS. This information was factually incorrect or not cross-verified by the Assessing Officer before recording reasons. The assessee had not carried out its shares or securities transactions with GS. Further, there was no coherence between the information available with the Assessing Officer vis-a-vis the transactions of the assessee, and formation of belief that income had escaped the assessment. These reasons were vague and inconclusive. Therefore, on the basis of such reasoning, the assessment of the assessee could not be reopened.(AY.2006-07)

79       { In Favor of Assessee } [C(T)(Chd.)(Trib. ]-[S.147]

Century Fiscal Services Ltd. v. ITO (2020) 84 ITR 174(Chd.)(Trib.)

Reassessment-Accommodation entries-Share capital-Unsecured loan-Borrowed satisfaction-Non application of mind-Reassessment is held to be bad in law.[S. 69, 148]

Tribunal held that the belief of escapement of income as recorded in the reasons, was clearly not that of the Assessing Officer but a borrowed belief. Since the satisfaction regarding escapement of income as recorded in the reasons was not that of the Assessing Officer but was borrowed satisfaction, the jurisdiction assumed to reopen the case under section 147 of the Act was bad in law.(AY. 2009-10)

80       { In Favor of Assessee } [C(T)(Chd.)(Trib. ]-[S.147]

Blue Coast Infrastructure Development P. Ltd. v. Dy.CIT (2020) 81 ITR 419 / 203 TTJ 327/ 191 DTR 356 (Chd.)(Trib.)

Reassessment-Capital gains-Agricultural Land-Change of user by Panchayat or land revenue authorities-Not showing positive income-Reassessment notice is held to be not valid. [S.2(14)(iii),10(37),133A, 148]

Allowing the appeal the Tribunal held that although the Assessing Officer had information coming into his possession that the assessee had sold the property but had not returned or paid the capital gains tax, he was also aware that the necessary enquiries were made in this respect not only by his office but also by the Investigation Wing that too not only during the survey action at the premises of the assessee carried out under section 133A but also thereafter. The assessee duly explained the transaction and explained that the land being agricultural and not falling within the definition of capital asset under S. 2(14) hence was not exigible to capital gains tax. The AO based his reasons for reopening of the assessment on the information received from the Deputy Commissioner which did not support the reasoning given by the AO.When the very reasons on the basis of which the reopening, allegedly, could not form the basis of forming the belief by the AO that the income of the assessee had escaped assessment, the consequential reassessment order formed by the AO under S. 147 was illegal and the order was accordingly quashed.(AY.2008-09)

81       { In Favor of Assessee } [C(T)(Chd.)(Trib. ]-[S.147]

Manjit Singh v. Dy.CIT(IT)(2020) 81 ITR 454/ 195 DTR 121/ 207 TTJ 1041 (Chd.)(Trib.)

Reassessment-Non-Resident-No jurisdiction-Transfer of proceedings to competent jurisdiction-No notice was issued by Assessing Officer of competent jurisdiction-Reassessment not valid-Void ab initio. [S. 127, 148]

The assessee was a non-resident Indian. The Income-tax Officer Dasuya had no jurisdiction to initiate reopening of the assessment. However, thereafter he transferred the case to the Additional Director fully convinced that he himself had no jurisdiction to make the assessment in the case of the assessee. No notice under section 148 was issued by the Deputy Commissioner, Chandigarh to the assessee. Since the Income-tax Officer, Dasuya had no jurisdiction to reopen the assessment, any notice issued by him had no legal validity. The Deputy Commissioner, Chandigarh did not issue any notice under section 148 to the assessee. Reassessment is held to be bad in law. Tribunal also held that under the provisions of section 127 the Income-tax Officer, Dasuya himself had no jurisdiction to suo motu transfer the case to the Deputy Commissioner. Rather, the transfer of the case under the provisions of section 127(1) could be ordered by the competent authority prescribed in the provisions. (AY. 200910)

82       { In Favor of Assessee } [C(T)(Cuttack)(Trib. ]-[S.147]

ITO v. Bhakta Charan Sahoo (2020) 83 ITR 19 (Cuttack)(Trib.)

Reassessment-Audit party note is not information-No failure to disclose material facts-Reassessment is not valid-The tax effect below prescribed limit-Appeal of department is dismissed. [S.148, 253]

Dismissing the appeal, that nowhere in the record was it mentioned that the assessment had been reopened on the basis of an audit objection. If there was application of mind, it should be apparent from the material placed before the Tribunal. The details of purchases were available before the Assessing Officer at the time of the original assessment proceedings under section 143(3) of the Act and no new material had come to the knowledge of the Assessing Officer to take reassessment proceedings. It was merely a change of opinion and the Commissioner (Appeals) had considered the issue in the right perspective. The tax effect less than monetary limits appeal of revenue is dismissed. CBDT Circular No. 17 Of 2019 Dated 8-8-2019, [2019] 416 ITR (St.) 1.(AY. 2009-10)

83       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Nigam Computers Pvt. Ltd. v. ITO (2020) 78 ITR 384 (Delhi)(Trib.)

Reassessment-Accommodation entry-Information from Director of Income-Tax-No application of mind or independent inquiry or link between any tangible material-Reassessment not valid.[S.148]

Tribunal held that notice under section 148 was issued merely on the basis of the information from the Director of Income-tax that the assessee had received accommodation entry. There was no mention of any application of mind or any independent inquiry or any link between any tangible material and formation of reasons to believe that income chargeable to tax has escaped assessment. In the reasons recorded, the Assessing Officer had made vague remarks that the assessee had income chargeable to tax which had escaped assessment. The Assessing Officer had not even specified what was the amount of alleged income escaping assessment, which showed that the Assessing Officer had merely recorded certain unsubstantiated allegations on the basis of some information received. Therefore the proceedings initiated by invoking the provisions of section 147 were non est in law and without jurisdiction.(AY.2008-09)

84       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Alcatel Lucent India Ltd. v. ACIT (2020) 77 ITR 694 (Delhi)(Trib.)

Reassessment-After the expiry of four years-No new tangible material-AO seeking to correct error in original assessment-Held to be not permissible.[S.148]

Tribunal held that no new tangible material. AO seeking to correct error in original assessment is held to be not permissible. (AY.2005-06)

85       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Ramotar Singh, HUF v. ITO (2020)82 ITR 20(SN)(Delhi)(Trib.)

Reassessment-After theexpiry of four years-Capital gains-No failure to disclose any material facts-The reason must specify the nature of default or failure on the part of the assessee-Reassessment is not valid. [S.45, 148]

Tribunal held that the reasons recorded nowhere showed that there was any allegation of failure to disclose any material facts. The very same fact was examined by the Assessing Officer in the first round of reassessment proceedings. Therefore, issue of notice again on the same set of facts facts amounted to change of opinion. Merely using the expression “Failure on the part of the assessee to disclose fully and truly all material facts” was not enough. The reason must specify the nature of default or failure on the part of the assessee. The reassessment proceedings is held to be illegal and void ab initio. (AY.2012-13).

86       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Narayan Singh, HUF v. ITO (2020)82 ITR 18 (SN)(Delhi)(Trib.)

Reassessment-Capital gains-HUF-Individual-No direction was given by the Appellate Tribunal-Reassessment is held to be not valid.[S.148]

Allowing the appeal the Tribunal held that the Assessing Officer had totally misinterpreted the directions of the Tribunal and grossly erred in reopening the Assessment. The Tribunal had held given the direction to verify accordingly the reassessment is held to be not valid. (AY.2009-10)

87       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Arora / Sapra S.N. v. ITO (2020) 187 DTR 121 / 204 TTJ 137 (Delhi)(Trib.)

Reassessment-Cash credits-Information from investigation wing-Merely on the basis of information from investigation wing without any further verification reassessment is bad in law. [S.68, 148]

Allowing the appeal the Tribunal held that it was duty of AO to verify facts before coming to conclusion that there is escapement of income on account of cash deposited in bank account of assessee.AO even did not verify information received from Investigation Wing and did not even obey directions of Investigation Wing. Mere cash deposited in bank account of assessee per se would not disclose escapement of income. Assessee further explained that there is no unaccounted investment. AO recorded incorrect and wrong reasons for reopening of assessment and did not apply mind to facts of case before recording reasons for reopening of assessment. Therefore order was quashed. (AY.2006-2007, 2007-2008)

88       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Mukesh Chand Garg v. ITO (2020) 81 ITR 22(SN)(Delhi)(Trib.)

Reassessment-Client code modification-Income from undisclosed sources-Addition of entire addition as additional income-Reassessment was quashed and on merit addition was deleted.[S.69A, 148]

Allowing the appeal the Tribunal held that the Assessing Officer had passed the assessment order which was similarly worded in the preceding assessment year 2009-10 in the assessee’s case. In that case though the Tribunal had accepted the Department’s theory of misuse of clients code modification facility, it had accepted the assessee's explanation and discarded the Department's theory that profits of the assessee were passed on to the clients. The Tribunal noticed that the Department had not contended that the client code modification facility was often misused by the assessee to pass on losses to the investors, who may have sizable profit arising out of commodity trading against which such losses could be set off. What could be taxed in the hands of the assessee was the income escaping assessment. Even if the Department's theory of the assessee having enabled the clients to claim contrived losses, it had to bring on record some evidence of the income earned by the assessee in the process, be it in the nature of commission or otherwise. In the present case, the Assessing Officer had added the entire amount of doubtful transactions by way of the assessee's additional income, which was wholly impermissible. The Tribunal deleted the addition on the merits and quashed the reopening of the assessment holding that the addition made by the authorities on account of client codes modification was not justified. The orders of the authorities were set aside and the entire addition was deleted.(AY.2010-11)(Followed PCIT v. Pat Commodity Services Pvt Ltd (Bom.HC) )

89       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Meena Gupta v. ITO (Delhi)(Trib.) Sheela Aggarwal v. ITO (Delhi)(Trib.) Garima Agarwal v. ITO (Delhi)(Trib.) Shri Narender Kumar v. ITO (Delhi)(Trib.) Shri Hanuman Prasad v. ITO (Delhi)(Trib.) Shri Gaurav Aggarwal v. ITO (Delhi)(Trib.) Shri Sourav Jindal v. ITO (Delhi)(Trib.)

Reassessment-Information from investigation wing-Objections not disposed-Material not confronted with the reasons recorded-Reassessment notice was quashed.[S.148]

Tribunal quashed the reassessment proceedings on the ground that objections not disposed, material received from the investigation wing not confronted with the reasons recorded. (Followed Fomento Resorts & Hotels Ltd.(, TA No.63 of 2007 dt.30.08.2019)(ITA.No.7372/Del./2019 dt 10-9-2020 (AY. 2011-12)

90       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

DCIT v. IFCI Ltd. (2020) 185 ITD 742 (Delhi)(Trib.)

Reassessment-Liabilities taken over by Government of India-No failure to disclose material facts-Reassessment is held to be not justified. [S. 4, 37(1) 43B, 148]

Tribunal held that reopening notice was issued against assessee on ground that a sum of certain amount consisting of two items i.e. liabilities taken over by Government of India and certain amount of reduction claimed from cost of borrowings, was not brought to tax, since there was no failure on part of assessee to fully and truly disclose all material facts necessary for assessment during original assessment proceedings and there was no mention of any fresh tangible material coming into possession of Assessing Officer, impugned reopening of assessment was unjustified. (AY. 2003-04)

91       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Durga Ferrous P. Ltd. v. ITO (2020) 78 ITR 24 (SN)(Delhi)(Trib.)

Reassessment-Notice under section 143(2) issued on same date as return filed in response to notice-Non-application of mind-Reassessment is held to be not valid. [S.143(2), 148]

Tribunal held that on filing the return in pursuance of notice u/s 148 on October 5, 2015, and the notice under section 143(2) was issued on the very same date. Tribunal held that this showed nonapplication of mind on the part of the Assessing Officer in issuing notice under section 143(2) and thereafter assuming jurisdiction to frame assessment. The notice was not tenable in law and the proceedings needed to be quashed.(AY.2008-09)

92       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Joginder Dahiya v. ITO (2020) 81 ITR 31 (SN)(Delhi)(Trib.)

Reassessment-Reasons for initiation of those proceedings ceased to survive-Other than those in respect of which proceedings initiated will not survive.[S.148]

Tribunal held that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings were initiated but he was not so justified when the reasons for the initiation of those proceedings cease to survive. Since the Assessing Officer had initiated proceedings under section 147 for escapement of income of Rs. 9,43,897 which was the returned income filed prior to issue of notice under section 148 in the belated return and as well as in the return filed in response to the notice under section 148 and since the Assessing Officer had accepted the returned income and proceeded to make various other additions without issuing fresh notice under section 147 / 148, the Assessing Officer had exceeded his jurisdiction in reassessing issues other than those in respect of which the proceedings were initiated since reasons for the initiation of those proceedings ceased to survive. The various other additions made by the Assessing Officer were not in accordance with law being without jurisdiction and, therefore, were to be deleted.(AY.2010-11)

Raj Bala v. ITO (2020) 81 ITR 31 (SN)(Delhi)(Trib.)

93       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Gulshan Harbans Dhingra v. ITO (2020) 80 ITR 21 (SN)(Delhi)(Trib.)

Reassessment-Unexplained money-Cash deposits in bank account-Reasons for reopening of assessment recorded by concealing order-sheet entries-Reassessment not valid.[S.69, 148]

Tribunal held that in the order-sheet the Assessing Officer mentioned that he received information against the assessee for cash deposit of Rs. 22,74,500 for which the assessee explained that the cash was deposited from sale of shoes in different towns. The Assessing Officer was satisfied with the explanation of the assessee. Thereafter, there was no noting on any of the order-sheets. The Assessing Officer in the reasons recorded for reopening of the assessment had not mentioned the order-sheet entries. Thus the Assessing Officer had recorded incorrect facts in the reasons for reopening of the assessment by concealing the order-sheet entries. If the Assessing Officer recorded incorrect facts in the reasons, reopening of the assessment would not be valid. For examining the validity of the reassessment proceedings, the reasons alone had to be considered. When the Assessing Officer records wrong facts in the reasons, the proceedings under section 148 would not be justified. Since the same Assessing Officer had recorded the order-sheet entries prior to reopening of the assessment, he was bound by his facts recorded in the order-sheet. When the Assessing Officer was satisfied that the cash deposit in the bank account pertained to sale proceeds of shoes, the cash deposit per se in the bank account would not disclose escapement of any income from tax. Thus, the Assessing Officer was not justified in reopening the assessment. The reopening of the assessment was wholly unjustified and bad in law and was liable to be quashed. Resultantly, the addition on the merits stood deleted.(AY.2010-11)

94       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.147]

Adarsh Agrawal v. ITO (2020)77 ITR 52 (SN)(Delhi)(Trib.)

Reassessment-With in four years-Search and seizure-Alleged cash loans-Parties denying cash loans-Reassessment is held to be nor valid-Correct legal course could have been action u/s. 153C and not reassessment-Addition is deleted.[S. 132, 153A, 153C, 148]

Tribunal held that the parties have denied the cash loans, not examined the parties, neither original agreement was brought on record neither report of hand writing expert obtained. Reassessment is held to be not valid. Correct course of action could have been action u/s 153C and not reassessment. Accordingly the addition is deleted. (AY.2010-11)

95       { In Favor of Assessee } [C(T)(Indore)(Trib. ]-[S.147]

Sarwar Mohd. Khan v. ACIT (2020) 78 ITR 39 (SN)  (Indore)(Trib.)

Reassessment-No addition was made as regards reasons recorded-Reassessment is held to be not valid. [S.54F,148]

Tribunal held that no addition was made by the Assessing Officer in the reassessment proceedings for the reasons recorded in the notice issued under section 148. If after issuance of notice under section 148 the Assessing Officer accepts the contentions of the assessee and holds that the income which he initially formed a reason to believe had escaped assessment, had as a matter of fact not escaped assessment, it was not open to him independently to assess some other income. The assessment order was illegal since the Assessing Officer had not made any addition on the “reasons to believe” recorded in the notice issued under section 148 and had himself so admitted because the early withdrawal of the amount deposited in the capital gains account before the expiry of the time period provided under section 54F had been offered to tax by the assessee and shown as income for the assessment year 2011-12. (AY.2008-09)

96       { In Favor of Assessee } [C(T)(Jaipur)(Trib. ]-[S.147]

Pink City Reality (P.) Ltd. v. ITO (2020)77 ITR 133/ 196 DTR 272/ 204 TTJ 464 (Jaipur)(Trib.)

Reassessment-After the expiry of four years-No failure to disclose material facts-CIT granting two approvals of the same recorded reasons-Reassessment is held to be bad in law-Seized material not containing any incriminating materials-Addition is held to be not justified.[S. 69B, 148, 151]

The Tribunal held that the AO nowhere alleged that the income assessable to tax has escaped assessment due to the failure of the assessee to disclose fully and truly all material facts necessary for his assessment. The reopening of the assessment was after four years from the end of the relevant assessment year. When the AO had not even alleged the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment then, the reopening after four years was not sustainable as it was hit by the proviso to section 147. The CIT had granted approval twice and the first approval bore the date as April 14, 2014 whereas the second set bore the date March 14, 2014. There could not be two approvals of the same reasons recorded by the AO for issuing the notice under S. 148. The reopening was not valid. As regards seized material not containing any incriminating materials, addition is held to be not justified.(AY.2007-08, 2008-09)

Tarun Goel v. ITO (2020)77 ITR 133 / 196 DTR 272/ 204 TTJ 464 (Jaipur)(Trib.)

Arun Goel v. ITO (2020)77 ITR 133/ 196 DTR 272/ 204 TTJ 464 (Jaipur)(Trib.)

97       { In Favor of Assessee } [C(T)(Jaipur)(Trib. ]-[S.147]

ACIT v. Shiv Vegpro Pvt. Ltd. (2020) 82 ITR 195 / 208 TTJ 355 (Jaipur)(Trib.)

Reassessment-After theexpiry of four years-Accommodation entry-No failure to disclose material facts-Reassessment is held to be bad in law.[S.148, ITAT R. 27]

The Tribunal held that the Assessing Officer had not mentioned on what account or transactions the assessee had taken the accommodation entry. The Assessing Officer had just narrated the contents as received by him from the Investigation Wing without having all the details and investigation report. The Assessing Officer had not conducted any enquiry in respect of the information from the party who had allegedly made the statement of providing accommodation entries. Nor was there an allegation that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Thus, the reopening of the assessment after four years from the end of the AY. was not permitted. When finally the accommodation entries were found to be on account of sales made by the assessee which formed the primary record as part of the profit and loss account as well as computation of income, in the absence of any allegation by the Assessing Officer, Explanation 1 to section 147 could not be pressed into service. All the sales including the sales in dispute were duly accounted for in the books of account which were audited and subject to scrutiny of the Commercial Taxes Department. Therefore, the assessee could not be held guilty of not furnishing all the information necessary for assessment. The Tribunal also held that the issue of the validity of reopening under rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 was to be decided in favour of the assessee. Since this issue went to the root of the matter and the reassessment having been quashed the only consequence of deciding this issue in favour of the assessee was that the appeal of the Department would fail and the order of the Commissioner (Appeals) was upheld.(AY. 2011-12)

98       { In Favor of Assessee } [C(T)(Jaipur)(Trib. ]-[S.147]

Krish Homes (P.) Ltd. v. ITO (2020) 186 DTR 177 /78 ITR 101/203 TTJ 909 (Jaipur)(Trib.)

Reassessment-With in four years-Change of opinion-Capital gains on sale of agricultural land-No failure to disclose material facts-Approval granted was without application of mind-Reassessment is held to be bad in law [S. 2(IA), 10(1), 115JB, 148, 151]

Allowing the cross objection of the assessee the Tribunal held that , there was no failure on the part of the assessee to disclose material facts. The reasons recorded stated that income returned u/s 115JB was accepted on misinterpretation of law which could not be sustained. Tribunal also held that the approval granted was without application of mind. Accordingly the reassessment is held to be bad in law. (AY. 2013-14)

99       { In Favor of Assessee } [C(T)(Jaipur)(Trib. ]-[S.147]

ITO v. Krish Homes Pvt. Ltd. (2020)78 ITR 101/ 186 DTR 177/203 TTJ 909 (Jaipur)(Trib.)

Reassessment-With in four years-Change of opinion-Sale of agricultural land available on record at time of original assessment-Book profit-Agricultural Land-Gains on sale of agricultural land not deductible-Reassessment is held to be not valid. [S. 2(14(iii), 115JB,148]

Tribunal held that for assumption of jurisdiction, in the reasons recorded, the Assessing Officer had stated that the assessee had failed to fully and truly disclose all material facts necessary for the assessment. What material facts had not been disclosed by the assessee had not been spelt out by the Assessing Officer. The Assessing Officer had himself stated that the assessee had credited capital gains on sale of agricultural land in its profit and loss account and had reduced them while working out the book profits under section 115JB. Therefore, all the primary facts had been duly disclosed by the assessee and it was for the Assessing Officer to draw correct legal inference therefrom. Further, the proviso to section 147 was not applicable in the instant case as the notice under section 148 had been issued within four years from the end of the assessment year 2013-14. Thus the basic requirement for assumption of jurisdiction under section 147 was not satisfied in the instant case and the consequent reassessment proceedings deserved to be set aside. Tribunal also held that the decision of the Tribunal had since been affirmed by the Rajasthan High Court. Undisputedly, there was no change in the facts and circumstances of the case and therefore, the matter was decided in favour of the assessee. Followed CIT v. Usha International Ltd. (2012) 348 ITR 485(FB)

(DelhiHC). Tribunal also held that gains on sale of agricultural land were not deductible while computing book profits. Relied on Krish Homes P. Ltd. v. ITO (2020)421 ITR 105 (RajHC) on special leave petition (2020)420 ITR (St.) 2 (SC). (AY.2013-14)

100       { In Favor of Assessee } [C(T)(Kol.)(Trib. ]-[S.147]

Bajaj Parivahan P. Ltd. v. ITO (2020) 79 ITR 705 (Kol.)(Trib.)

Reassessment-After the expiry of four years-Cash credits-All material facts were disclosed in the original assessment proceedings-Reassessment is held to be not valid. [S.68, 148, 194A]

Tribunal held that the reasons recorded were vague and general in nature. In this case the proviso to section 147 came into play. The assessee had disclosed during the course of the original assessment proceedings the details of all the creditors. The assessee had filed a copy of the notice issued under section 142(1) along with the annexure and replies. He had also filed a copy of the unsecured loan account which contained the account of the lender. The assessee had paid interest on this loan and deducted tax at source. The loan had been repaid within the same year. On these facts, it was wrong on the part of the Assessing Officer to state that the assessee had failed to disclose fully and truly all material facts necessary for assessment. Merely alleging that there was failure to disclose, would not serve the purpose. In this case, a factually wrong allegation had been made that the amount of Rs. 10 lakhs had not been fully and truly disclosed. Reopening of the assessment on such wrong reasons could not be upheld. Tribunal also held that as the assessee had explained the credit and as the amount had also been repaid along with interest, the addition made under section 68 was not justified.(AY.2011-12)

101       { In Favor of Assessee } [C(T)(Kol.)(Trib. ]-[S.147]

Budhiya Agencies P. Ltd. v. Dy.CIT (2020)77 ITR 72 (SN)(Kol.)(Trib.)

Reassessment-Reason to be believe-Securities premium account-Merely on the basis of information received by another AO based on appraisal report of A group-Reassessment cannot be made. [S.148]

Tribunal held that the AO is duty bound to make reasonable enquiry to collect material to form reason to believe income has escaped assessment. Merely on the basis of information received by another AO based on appraisal report of a group reassessment is held to be not valid. Reassessment proceedings is quashed. (AY.2008-09)

102       { In Favor of Assessee } [C(T)(Kol.)(Trib. ]-[S.147]

Bhagwant Merchants P. Ltd. v. ITO (2020)79 ITR 595 (Kol.)(Trib.)

Reassessment-Wrong facts and figures-Non-application of mind-Reassessment is held to be not valid. [S. 68, 148]

Tribunal held that the reopening of assessment based on wrong facts and figures was bad in law. The reopening was also bad in law as it proved non-application of mind by the Assessing Officer. The assessee had disclosed the sale of shares in its books of account. Once the sale was declared as income by the assessee, the question of treating the amount as a cash credit under section 68 resulted in double addition. Moreover, the gross receipt could not be brought to tax, specifically when the assessee had acquired the shares pursuant to an allotment as evidenced by the letter of allotment, payment details, etc. Thus, the addition was also bad on the merits.(AY.2011-12)

103       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.147]

Dy. CIT v. Palm Tech India Ltd. (2020) 78 ITR 4 (SN)(Mum.)(Trib.)

Reassessment-Amalgamation-Information of amalgamation was brought to notice of Assessing Officer-Reassessment proceedings against amalgamating company is held to be void ab initio. [S.148]

Tribunal held that the assessee had duly intimated the fact of merger to the Assessing Officer and during penalty proceedings. The assessee had also given the address of the registered office for further correspondence. Despite of these intimations, the Assessing Officer proceeded to frame the assessment in the name of the amalgamating company which was declared void ab initio (AY.2008-09)

104       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.147]

Ashwin S Mehta v. Dy. CIT (2020) 83 ITR 422 (Mum.)(Trib.)

Reassessment-Incorrect assumption of fact-Recording of reason that the assessee has not filed the return-Return was filed before recording of reasons-Reassessment is held to be invalid. [S.148]

Allowing the appeal the Tribunal held that the first reason for reopening the assessment was that the assessee had not filed his return of income for the year under consideration. The assessee had filed the return of income on March 31, 2011, i. e., prior to the recording of reasons for reopening the assessment, by the Assessing Officer. Once there was a factually incorrect basis about the formation of belief about escapement of income, such reasons could not be taken to be valid even if the alternate reasons relied upon may be correct. Thus, as the recording of reasons was based on an incorrect assumption of fact, it invalidated the formation of belief envisaged under section 147 / 148 of the Act. As a consequence thereof, the assumption of jurisdiction under section 147 / 148 of the Act was untenable and liable to be set aside.(AY. 2010-11)

105       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.147]

Medley Pharmaceuticals Ltd. v. DCIT (2020) 184 ITD 8/207 TTJ 143 (Mum.)(Trib.)

Reassessment-Sales promotion expenses-No new information-Reassessment is held to be bad in law. [S.37(1), 148]

Assessing Officer while framing regular assessment under section 143(3), had consciously formed an opinion that out of sales promotion expenses incurred by assessee pharma company, only those expenses incurred for giving gifts to doctors were liable to be disallowed under section 37(1) as per Indian Medical Council Regulations and CBDT Circular No. 5/2012, dated 1-8-2012. On appeal the Tribunal held that where reassessment was initiated by Assessing Officer, not on basis of any fresh tangible material or any new information which had came to his notice subsequent to culmination of original assessment proceedings, but on basis of same set of facts as were there before his predecessor at time of framing of regular assessment, same was to be quashed. (AY. 2012-13)

106       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.147]

Suresh H. Thakkar v. CIT(A)(2020) 78 ITR 73 (SN)(Mum.)(Trib.)

Reassessment-Unexplained investment-Date wise statement of withdrawal of cash from bank account and deposit in bank account neither faulted nor doubted-Addition is held to be not justified. [S. 69, 148]

Tribunal held that the assessee had filed a detailed statement of date-wise withdrawals from his bank accounts during the financial years 2008-09 and 2009-10. According to the cash statement there was a cash balance of Rs. 15,14,150 as on March 11, 2010, and out of the total cash balance as on that day the assessee had paid cash of Rs. 13 lakhs to the builder. The authorities had doubted the availability of cash on the plea that the cash was withdrawn by the assessee from his bank account in the earlier year and was not available for giving to the builder. Neither the Assessing Officer nor the Commissioner (Appeals) had brought any material on record to suggest that the cash so withdrawn by the assessee was utilised for some other purposes and was not available with him on the date of payment. The correctness of date-wise statement of withdrawal of cash from the bank account and deposit in the bank account was neither faulted nor doubted by any of the authorities. Therefore there was no justification on the part of the Commissioner (Appeals) for accepting only Rs. 6.50 lakhs out of the total addition of Rs. 13 lakhs made by the Assessing Officer. The Assessing Officer was directed to delete the addition made.(AY.2010-11)

107       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.147]

Eagle Burgmann India Pvt. Ltd. v. Dy.CIT (2020) 185 DTR 401 / 203 TTJ 477 (Mum.)(Trib.)

Reassessment-With in four years-Failure to deduct tax at source-Merely on the doubt about applicability of tax deducted at source, reassessment is held to be not valid.[S.40(a)(ia), 148]

Tribunal held that re-opening of assessment was made without any tangible material indicating escapement of income. The AO in the reasons recorded has only raised some doubt regarding the applicability of TDS provisions to the payment. When the Departmental Authorities are not sure about the nature of payment, it is not understood how they can come to a conclusion that TDS provisions are applicable. (AY. 2008-09)

108       { In Favor of Assessee } [C(T)(Nag.)(Trib. ]-[S.147]

Dy.CIT v. Bachhraj Bhavan (2020) 189 DTR 69/ 203 TTJ 1008 (Nag.)(Trib.)

Reassessment-Book profit-No failure to disclose material facts-With in four years-Change of opinion-Reassessment is held to be bad in law. [S.14A, 115JB, 148]

In the reassessment proceedings the Assessing Officer made addition to the book profit in terms of statutory provisions of clause (f) of explanation (1) of sub section (2) to section 115JB of the I.T. Act, 1961 as the same remained to be done in the assessment u/s 143 (3) of the Act. On appeal the CIT(A) held that the reassessment was bad in law due to change of opinion. On appeal by the revenue the Tribunal referred binding decisions of Jurisdictional High Court in IPCA v. Gajanand Meena (2001) 251 ITR 416 (Bom.HC) Bhavesh Developers v. . Assessing Officer (2010) 329 ITR 0249 (Bom.HC), Sir Warana Sahakari Dudh Utpadak Prakriya Sangh v. ACIT (2005) 199 CTR 24 (Bom.)(Bom.HC),Bank International Indonesia v. DDIT (IT) ITA No.1083/Mum/2006., Aventis Pharma Ltd. v. ACIT (2010) 323 ITR 570 (Bom.HC) Asteroids Trading & Investments (P) Ltd.v DCIT (2009) 223 CTR 144 (Bom.HC) Cartini India Ltd. v. Addl. CIT (2009) 314 ITR 275 (Bom.HC). Accordingly the appeal of revenue was dismissed. As Regards appeal of assessee in respect of disallowance u/ s.14A of the Act ,matter remanded to the file of CIT(A)(AY. 2009-10 to 2011-12) Dy.CIT v. Jamnalal Sons (P.)Ltd. (2020) 189 DTR 69/ 203 TTJ 1008 (Nag.)(Trib.)

109       { In Favor of Assessee } [C(T)(Pune)(Trib. ]-[S.147]

W.B. Engineers International P. Ltd. v. Dy. CIT (2020) 78 ITR 21(SN)(Pune)(Trib.)

Reassessment-After theexpiry of four years-Depreciation-Reassessment is held to be not valid.[S. 148]

Tribunal held that the original assessment in the assessee’s case had been completed and the notice was issued after the expiry of four years from the end of the relevant assessment year. The reassessment could have been validly initiated on failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. A note had been appended to the return at the foot of the schedule reading that additional depreciation at 20 per cent. had been claimed under section 32, ninth proviso. The assessee did make a disclosure of the claim of additional depreciation. Moreover, the Assessing Officer while finalising the assessment, did take note of this fact, and did not allow travelling expenses incurred for purchase of new plant and machinery and treated such amount as capital expenditure. He not only allowed depreciation but also additional depreciation on such amount Therefore, not only had the assessee made disclosure of the claim of additional depreciation in the original return but the Assessing Officer was conscious of the same fact and had accepted such claim. The case was covered by the first proviso to section 147. Therefore, the initiation of reassessment proceedings was set aside.(AY.2006-07)

110       { In Favor of Assessee } [C(T)(Pune)(Trib. ]-[S.147]

Dy. CIT v. Manav Realty (2020) 83 ITR 37 (SN)(Pune)(Trib.)

Reassessment-Not objecting to initiation of reassessment proceedings-Not precluded from challenging validity of reassessment before appellate forums-Reassessment is held to be bad in law. [S.80IB(10), 148]

Dismissing the appeal the Court held that merely because the assessee did not raise any objection against the reassessment proceedings before the Assessing Officer, that did not mean that the question of validity of reassessment had attained finality and could not be challenged before the appellate forums. The quintessence of the matter was to examine whether or not the reassessment was valid and not whether or not any objection was taken by the assessee before the Assessing Officer. On facts the The Commissioner (Appeals) had recorded that the Assessing Officer in the original assessment proceedings had thoroughly examined the issue of date of commencement of the project. Thus, it was manifest that the reassessment came to be initiated by the Assessing Officer on the basis of no fresh material coming to his possession after the completion of the original assessment, which was, in fact, made only for the verification of claim of the deduction under the computer aided scrutiny selection. Rather it was a case of change of incumbent who reviewed the material existing on record and took a contrary view. Such change of opinion was strictly impermissible. There was no reason to disturb the finding recorded by the Commissioner (Appeals) that the reassessment proceedings were bad in law.(AY.2009-10)

111       { In Favor of Assessee } [C(T)(Agra(Trib. ]-[S.148]

K.P. Cold Storage v. ITO (2019) 201 TTJ 649/ (2020) 189 DTR 385 (Agra(Trib.)

Reassessment-Notice-Valid service of notice is not mere procedural requirement, it is a condition precedent to validity of any assessment or reassessment-If notice issued is shown as invalid, subsequent proceedings shall be illegal-Service by affixture-Reassessment was quashed as the service of notice was not proper as per the law as per Order V, Rule 12, Rule 17, rule 19, Rule 20(1) and Order III, Rule 2 of the Code of Civil Procedure 1908. [S. 147, 149, 282]

Tribunal held that there is neither any material on records nor brought to our notice during the course of hearing to assume for a moment that the duly appointed agent of the Firm was avoiding service and was keeping out of the way for being served with notice and thus there was reasons to believe that notice upon him could not be served in ordinary course, warranting recourse to service by Affixture. Thus, essential conditions of Rule-17 of Order-V of the Civil Procedure Code are not fulfilled and accordingly the order was quashed. Valid service of notice is not mere procedural requirement, it is a condition precedent to validity of any assessment or reassessment. If notice issued is shown as invalid, subsequent proceedings shall be illegal. Referred CIT v Ramendra Nath Ghosh (1971) 82 ITR 888 (SC), Jagannath Prasad v. CIT (1977) 110 ITR 27 (AllHC) Kunj Behari v. ITO (1983) 139 ITR 73 (P&HHC) Suresh Kumar Sheetlani v. ITO (2018) 96 taxmann.com 401./ 257 Taxman 338 (AllHC), Auram Jewellery Exports (P) Ltd v. ACIT (2017) 88 taxman.com 633 /54 ITR 1 (Delhi)(Trib.). (AY. 2009-10)

112       { In Favor of Assessee } [C(T)(Bang.)(Trib. ]-[S.148]

M. H. Mamatha (Smt.) v. ITO (2020)83 ITR 7 (SN)(Bang.)(Trib.)

Reassessment-Notice-Factum of death of assessee intimated to department much prior to issue of notice-Notice issued in name of deceased-Notice not valid. [S.147]

Tribunal held that the notice issued by the Assessing Officer was invalid because it was issued in the name of the deceased assessee in spite of the factum of the death of the assessee having been duly intimated to the Department much prior to the issue of notice. The notice in the name of the deceased assessee and the consequent assessment order were invalid and liable to be quashed.(AY.2008-09)

113       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.148]

Dy. CIT v. Taureg Properties and Security Services Ltd. (2020)80 ITR 386 (Delhi)(Trib.)

Reassessment-Notice-Assessing Officer not signing notice or mentioning assessment year-Notice is illegal-Reassessment proceedings not valid. [S.148]

Tribunal held that the notice of reassessment was unsigned and did not mention any assessment year. Since an unsigned notice had been sent to the assessee, it vitiated the entire reassessment proceedings because it was the jurisdictional notice to initiate proceedings under section 147 of the Income-tax Act, 1961. Since the notice itself was illegal and bad in law, the entire reassessment proceedings were vitiated and the Assessing Officer could not have assumed jurisdiction under section 148 to frame the assessment against the assessee.(AY.2000-01)

114       { In Favor of Assessee } [C(T)(Delhi)(Trib. ]-[S.148]

Wimco Seedlings Ltd. v. JCIT (2020) 82 ITR 235 / 183 ITD 211 (Delhi)(Trib.)

Reassessment-Notice-Recorded reasons-Failure to provide complete details of reasons recorded and not merely few extracts of said reasons-Reassessment is held to be bad in law. [S.147]

The assessee filed writ petition challenging validity of reassessment proceedings on ground that the Assessing Officer did not record detailed reasons for reopening of assessment. The reasons supplied to the assessee and reasons brought on record by revenue authorities were altogether different, validity of reassessment proceedings could not be upheld and, thus, said proceedings deserved to be quashed. (AY. 1989-90 to 1991-92)

115       { In Favor of Assessee } [C(T)(Mum.)(Trib. ]-[S.148]

DCIT v. Palm Tech India Ltd. (2020) 78 ITR 4 (SN)(Mum.)(Trib.)

Reassessment-Notice-Validity-Amalgamation of companies-Effect-Amalgamating company ceases to exist-Factum of amalgamation brought to notice of AO-Reassessment proceedings against amalgamating company-Not valid. [S.147]

On appeal, the Tribunal held that the CIT(A) had given a categorical observation that the reassessment was initiated based on the audit objection. Even, on the date of such audit objection, the erstwhile assessee was not in existence pursuant to the amalgamation. Further, despite various intimations given, during penalty proceedings, the Assessing Officer proceeded to frame the reassessment in the name of the amalgamating company, which was declared void ab initio by the CIT(A). Given this, the reassessment was liable to be set aside. (AY.2008-09)