9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (9) TMI 574 - HC - Income TaxValidity of Re-assessment under 147 - Held That - an assessment under Section 147 is permissible subject to the period of limitation stated therein, irrespective of whether the return was filed or intimation sent to the assessee or regular assessment under Section 143(3) after issuing notice under Section 143(2) of the Act was made or not. In other words, even within the time available for issuing notice under Section 143(2) for making regular assessment if the Assessing Officer is of the view that materials available with him or discovered by him are such as to justify income escaping assessment under Section 147, he is free to record the reasons for the belief and proceed to make income escaping assessment under Section 147 without proceeding to make a regular assessment under Section 143(3) of the Act. The view expressed by us is in conflict with the view expressed by the Delhi High court in KLM ROYAL DUTCH AIRLINES Versus Assistant Director Of Income-Tax (2007 -TMI - 13420 - DELHI High Court) wherein they have held that once notice is issued for regular assessment under Section 143(2), the Assessing Officer has no authority to make income escaping assessment under Section 147 of the Act irrespective of whether the conditions of Section 147 are satisfied or not. However, as already stated, considering the consistent view taken by the Madras and Delhi High Courts that an income escaping assessment under Section 147 cannot be completed within the time available for issuing notice under Section 143(2) of the Act and for completion of assessment under Section 143(3) and since these decisions remain unchallenged by the department, we dismiss the departmental appeal for the year 2003-2004 i.e. ITA No.254/2010.
Issues Involved:
1. Validity of re-assessments under Section 147 of the Income Tax Act for the assessment years 1999-2000, 2000-2001, 2002-2003, and 2003-2004. 2. Applicability of the Supreme Court's decision in Rajesh Jhaveri Stock Brokers (P.) Ltd. 3. Consistency of the Tribunal's decision with the decisions of the Madras and Delhi High Courts. Issue-wise Detailed Analysis: 1. Validity of Re-assessments Under Section 147: The Revenue appealed against the Income Tax Appellate Tribunal's orders declaring the re-assessments completed on the respondent-assessee under Section 147 of the Income Tax Act for the assessment years 1999-2000, 2000-2001, 2002-2003, and 2003-2004 as invalid. The assessee had filed income tax returns in time, which were processed under Section 143(1). Notices under Section 148 were issued for income escaping assessment under Section 147. The assessee objected, arguing that without a regular assessment under Section 143(3), re-assessment under Section 147 was not permissible. The CIT(Appeals) upheld the re-assessments for the first two years but declared them invalid for the next two years. The Tribunal, following the Madras and Delhi High Courts' decisions, upheld the assessee's contention that re-assessment under Section 147 was not permissible within the time provided for regular assessment under Section 143(3). 2. Applicability of the Supreme Court's Decision in Rajesh Jhaveri Stock Brokers (P.) Ltd.: The Tribunal's assumption that re-assessments for the years 1999-2000, 2000-2001, and 2002-2003 were within the time for issuing notice under Section 143(2) was factually incorrect. The time for issuing notice under Section 143(2) had expired for these years. The Supreme Court's decision in Rajesh Jhaveri Stock Brokers (P.) Ltd. clarified that the absence of a regular assessment under Section 143(3) does not bar re-assessment under Section 147. Therefore, the Tribunal's orders for these three years were not sustainable. The appeals for these years were allowed, and the cases were remanded to the Tribunal to consider the reasons recorded for the re-assessments under Section 147. 3. Consistency of the Tribunal's Decision with the Decisions of the Madras and Delhi High Courts: For the assessment year 2003-2004, the Tribunal cancelled the re-assessment under Section 147, which was within the time for issuing notice under Section 143(2). The Revenue argued that the Assessing Officer could initiate proceedings under Section 147 even within the time for regular assessment under Section 143(3). The Supreme Court's decision stated that failure to take steps under Section 143(3) does not render the Assessing Officer powerless to initiate re-assessment proceedings under Section 147. However, the Madras and Delhi High Courts held that within the time for regular assessment under Section 143(3), the Assessing Officer should not proceed with income escaping assessment under Section 147. The Tribunal's decision for 2003-2004 was consistent with these High Courts' decisions. The appeal for 2003-2004 was dismissed, adhering to the consistent view of the Madras and Delhi High Courts. Conclusion: The High Court allowed the appeals for the assessment years 1999-2000, 2000-2001, and 2002-2003, setting aside the Tribunal's orders and remanding the cases for reconsideration. The appeal for 2003-2004 was dismissed, maintaining the consistent view of the Madras and Delhi High Courts that re-assessment under Section 147 is not permissible within the time for regular assessment under Section 143(3).
|
