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2015 (10) TMI 2721 - AT - Income TaxReassessment - validity of notice issued u/s 148 - Assessment is in pursuance of an order on appeal u/s 150 - Held that - an appellate or revisional authority cannot give a direction for assessment or reassessment which goes to the extent of conferring jurisdiction upon the AO if his jurisdiction had ceased due to the bar of limitation - if the issuing of a notice had become time-barred at the time of the order which was the subject-matter of the appeal then section 150 (1) cannot be invoked for making an assessment or reassessment - hence the proceedings initiated u/s 147 for the AY 2002-03 are impermissible and therefore the AO is not empowered to reopen the same u/s 150(1) considering the restriction placed by section 150 (2) - appeal by revenue is dismissed.
Issues Involved:
1. Deletion of disallowance under sections 80-IA/80-IB of the Act amounting to Rs. 44,95,392. 2. Validity of notice issued under section 148 for AY 2002-03. 3. Applicability of section 150(1) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Disallowance under Sections 80-IA/80-IB: The assessee had claimed deductions under sections 80HHC and 80-IA/80-IB in the return of income for AY 2002-03. The Assessing Officer (AO) observed that the deductions were incorrectly allowed under section 143(1) without scrutiny. The AO noted that the deduction under section 80HHC should be computed after deducting the amount allowed under section 80-IA/80-IB, as per the provisions of section 80-IA(9). The AO also observed that the gross total income included receipts from Duty Drawback, which, as per Supreme Court rulings, should not be treated as income derived from the business of the industrial undertaking and thus not eligible for deduction under section 80-IA/80-IB. The AO recomputed the deductions and disallowed the amount of Rs. 44,95,392. 2. Validity of Notice Issued under Section 148 for AY 2002-03: The notice under section 148 read with section 150 was issued on 15.03.2011, which was beyond the six-year time limit stipulated in section 149(1)(b). The assessee contended that no appeal had been preferred for AY 2002-03 and hence, the notice was time-barred. The AO issued the notice based on the Delhi High Court's order for AY 2003-04, which held that deductions under other sections of Chapter VI-A should be computed after deducting the amount allowed under section 80-IA/80-IB. The AO argued that the notice was valid under section 150(1) to give effect to the High Court's order. 3. Applicability of Section 150(1) of the Income-tax Act, 1961: The CIT(A) analyzed section 150 and concluded that the AO's action was beyond jurisdiction. Section 150(1) allows reopening of assessments to give effect to any finding or direction by a superior authority without a time limit. However, section 150(2) restricts this if the reassessment would have been time-barred at the time of the original order. The CIT(A) noted that the High Court's order pertained to AY 2003-04, not AY 2002-03, and no proceeding was pending for AY 2002-03. Therefore, the notice issued under section 148 was barred by limitation, and the AO's reopening of the case under section 150(1) was not justified. Conclusion: The Tribunal upheld the CIT(A)'s decision, stating that the AO was not justified in reopening the assessment for AY 2002-03 based on the High Court's order for AY 2003-04. The Tribunal concurred that section 150(1) could not be invoked as the notice was time-barred and the High Court's order did not pertain to AY 2002-03. The appeal by the revenue was dismissed, and the CIT(A)'s order deleting the disallowance of Rs. 44,95,392 was upheld.
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