2016 (3) TMI 150 - SC - Income Tax

Reopening of assessment - HC reversed the view taken by the Tribunal holding that even if there was no original assessment order passed under Section 10 of the Act, there could be re-assessment - Held that - High Court has wrongly not acted upon the ratio laid down in Trustees of H.E.H. The Nizam s Supplemental Family Trust s which squarely applies in the instant case in favour of the assessee 2000 (2) TMI 4 - SUPREME Court . The ratio of the said judgment is that in those situations where there is no assessment order passed, there cannot be a notice for re-assessment inasmuch as the question of re-assessment arises only when there is an assessment in the first instance. - Decided in favour of assessee

Summary

Issues:
- Re-opening of assessment for Assessment Year 1997-98 under the Interest Tax Act, 1974
- Validity of re-assessment without an original assessment order
- Interpretation of the judgment in Trustees of H.E.H. The Nizam's Supplemental Family Trust v. CIT [2000] 242 ITR 381 SC

Analysis:
The Supreme Court considered the issue of re-opening the assessment for the Assessment Year 1997-98 under the Interest Tax Act, 1974. The appellant/assessee had not received any assessment order for this year. The Assessing Officer attempted to re-open the assessment after the due date by issuing a notice under Section 10 of the Act. The main contention was that without an original assessment order, there could be no re-opening or re-assessment. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal agreed with the assessee's argument, setting aside the re-assessment order. However, the High Court ruled differently, allowing re-assessment even without an original assessment order, contrary to the judgment in Trustees of H.E.H. The Nizam's Supplemental Family Trust v. CIT [2000] 242 ITR 381 SC.

Upon review, the Supreme Court found that the High Court had erred in not applying the ratio established in Trustees of H.E.H. The Nizam's Supplemental Family Trust case, which supports the assessee's position. The Court emphasized that re-assessment can only occur when there has been an initial assessment order. As the appellant had not received any such order, the re-assessment was deemed invalid. Therefore, the Supreme Court allowed the appeal, overturning the High Court's decision and reinstating the orders of the lower authorities in favor of the assessee.