9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (3) TMI 152 - HC - Income TaxReassessment proceedings - ITAT confirmed CIT(A) decision cancelling the reassessment proceedings - Held that - It is evident that the self same reasons which were the basis for proceedings under Sections 147/148 of the Act, were also the foundation for an admitted rectification which, however, proved to be abortive. Not content with that move, the AO sought to issue reassessment proceedings. The basis for all these, in turn, was an audit report. Now, as to the status of audit reports, the law is clear. In CIT v. Simbhaoli Sugar Mills Limited ( 2011 (3) TMI 701 - DELHI HIGH COURT ) the Court, after applying the ratio in Kelvinator (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) also held that initiation of reassessment proceedings on the basis of audit report objections is impermissible. In this regard, the Court also notices the ruling in Transworld International Inc. v. JCIT (2004 (9) TMI 26 - DELHI High Court) and Indian and Eastern Newspaper Society v. CIT (1979 (8) TMI 1 - SUPREME Court) ITR 996. This was subsequently affirmed in CIT v. Lucas TVS Ltd. (2000 (12) TMI 102 - SUPREME Court). In the circumstances, therefore, we are of the opinion that no question of law arises; the ITAT acted within its rights in applying the ratio of previous binding decisions and affirming the CIT (Appeals) s order. - Decided against revenue.
Issues:
1. Validity of reassessment proceedings based on audit objections. 2. Contention of the Revenue regarding inadmissible contingent liabilities claimed by the assessee. 3. Application of legal precedents in determining the validity of reassessment. Issue 1: Validity of reassessment proceedings based on audit objections The case involved the Revenue appealing against the ITAT's decision affirming the CIT(Appeals)'s cancellation of reassessment proceedings. The AO had sought to reopen the assessment based on audit objections, even though the issue had been considered during the original assessment. The ITAT held that the reassessment was not justified in law as the assessing officer reopened the assessment merely to align with audit objections, which was not a valid reason. Citing the precedent in CIT v. Kelvinator of India Limited, the ITAT upheld the CIT(Appeals)'s decision, emphasizing that once an issue was examined during the original assessment, it could not be a proper case for reassessment. The ITAT dismissed the Revenue's appeal, concluding that the reassessment was bad in law. Issue 2: Contention of the Revenue regarding inadmissible contingent liabilities claimed by the assessee The Revenue argued that the assessee had claimed contingent liabilities in its original return, which were inadmissible and amounted to concealment of income. However, the Court noted that the AO's actions were based on the same reasons that led to rectification proceedings, which were later dropped. The AO then initiated reassessment proceedings based on audit objections. Relying on legal precedents, including CIT v. Simbhaoli Sugar Mills Limited and Transworld International Inc. v. JCIT, the Court held that reassessment based on audit report objections was impermissible. The Court also referred to the Supreme Court judgment in Indian and Eastern Newspaper Society v. CIT and CIT v. Lucas TVS Ltd. to support its decision. Ultimately, the Court found no merit in the Revenue's argument and dismissed the appeal. Issue 3: Application of legal precedents in determining the validity of reassessment The Court extensively relied on legal precedents, such as CIT v. Kelvinator of India Limited and other relevant judgments, to determine the validity of the reassessment proceedings. It emphasized that reassessment based solely on audit objections was not justified in law. By applying the principles established in previous cases, the Court affirmed the CIT(Appeals)'s decision and upheld the ITAT's ruling. The Court concluded that the ITAT acted within its rights by following the binding decisions of previous cases and dismissed the Revenue's appeal as unmerited. In summary, the High Court upheld the decision of the ITAT and CIT(Appeals) by dismissing the Revenue's appeal, ruling that the reassessment proceedings were not valid due to being based on audit objections and that the Revenue's contentions regarding inadmissible contingent liabilities were not justified. The Court extensively applied legal precedents to support its decision, emphasizing that reassessment solely on audit objections was impermissible under the law.
|
