2015 (1) TMI 915 - AT - Income Tax

CIT(A)jurisdiction to complete assessment - notice u/s.143(2) issued was barred by limitation of time - addition made while computing the income u/s.115JB of the Income Tax Act (Act) - Held that - As rightly pointed out by the Ld.CIT(A) the Assessing Officer did record reasons to believe and initiated proceedings much before the amendment to the Act was carried out subsequently. However since assessee has asked for the reasons subsequently after a year Assessing Officer instead of communicating the exact reasons as recorded by the Assessing Officer in the order sheet communicated in his own way relying on the retrospective amendment. Consequently assessee has objected to the re-opening before the Ld.CIT(A). Since Ld.CIT(A) clarified on the issue of exact noting in the order sheet we are of the opinion that the objections raised by assessee that assessment was re-opened on non-existent amendment raised on Ground No.1(a) and change of opinion in Ground No.1(b) does not survive. Even though the notice was issued and served beyond the time it is covered by the provisions of Section 292BB. Therefore the proceedings are held to be valid. The order of Ld CIT(A) on this is upheld. Decided against assessee. Issue of demand raised u/s.234D - Held that - This issue requires re-examination by the Assessing Officer. As seen an intimation u/s.143(1) as noted in the assessment order was issued on 06-05-2003 i.e. before 01-06-2003. The provisions u/s.234D were introduced effective from 01-06-2003 and it was already held by various High Courts that if the refund is issued after that date interest under Section 234D can be levied even for the Assessment Years prior to AY.2004-05. Therefore the crucial issue to be examined is whether the refund was issued prior to 01-06-2003 or later. - Decided in favour of assessee for statistical purposes

Issues Involved:
1. Jurisdiction to complete assessment.
2. Addition made while computing the income u/s.115JB of the Income Tax Act.
3. Issuance of notice u/s.143(2) being barred by limitation.
4. Re-opening of assessment based on a retrospective amendment.
5. Interest levied u/s.234D of the Act.

Detailed Analysis:

1. Jurisdiction to Complete Assessment:
The assessee objected to the jurisdiction of the Assessing Officer (AO) to complete the assessment. The AO rejected these objections, and the assessment was completed determining the book profit u/s.115JB at Rs. 18,42,89,994/-. The assessee contended before the Commissioner of Income Tax (Appeals) [CIT(A)] that the issuance of notice u/s.143(2) was barred by limitation and that the re-opening of the assessment was based on a non-existent amendment. CIT(A) rejected these objections, stating that the provisions of section 292BB applied since the assessee did not raise objections during the assessment proceedings.

2. Addition Made While Computing the Income u/s.115JB:
The AO added the provision for deferred tax of Rs. 4,55,57,386/- while computing the book profit u/s.115JB. The assessee objected, arguing that the retrospective amendment to section 115JB was not in force at the time of filing the return. CIT(A) upheld the AO's addition, citing the retrospective amendment introduced in the Finance Act, 2008, which mandated the inclusion of deferred tax in the book profit.

3. Issuance of Notice u/s.143(2) Being Barred by Limitation:
The assessee argued that the notice u/s.143(2) issued on 17-10-2008 was beyond the permissible time limit. CIT(A) held that the notice was barred by limitation but applied section 292BB, which precludes the assessee from raising such objections if they have cooperated during the assessment proceedings. The Tribunal agreed with CIT(A), noting that the assessee did not object to the notice during the assessment proceedings and thus, section 292BB was applicable.

4. Re-opening of Assessment Based on a Retrospective Amendment:
The assessee contended that the re-opening of the assessment was invalid as it was based on a retrospective amendment that came into effect after the issuance of the notice u/s.148. CIT(A) clarified that the AO had recorded the reasons for re-opening correctly and dismissed the assessee's objections. The Tribunal upheld this view, stating that the AO had valid reasons to believe that income had escaped assessment and that the re-opening was not based on a mere change of opinion.

5. Interest Levied u/s.234D of the Act:
The assessee argued that interest u/s.234D was incorrectly levied as it was applicable only from Assessment Year 2004-05. The Tribunal noted that the AO had not provided a detailed working of how the interest was calculated. The Tribunal remanded the issue back to the AO to re-examine the applicability of section 234D, considering whether the refund was issued before or after 01-06-2003.

Conclusion:
The Tribunal upheld the CIT(A)'s order on the issues of jurisdiction, re-opening of assessment, and addition made u/s.115JB. However, it remanded the issue of interest levied u/s.234D back to the AO for re-examination. The appeal was partly allowed for statistical purposes.

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