2017 (4) TMI 1378 - HC - Income Tax

Reopening of assessment - order passed by the DIT (Exemption) dated 15/02/2010 u/s 12AA(3) by which he cancelled the registration granted under Section 12AA retrospectively - Held that - The order passed by the learned tribunal quashing and setting aside the order passed by the Director of Income Tax (Exemption) dated 15/02/2010 cancelling the registration retrospectively has been confirmed by this Court 2017 (6) TMI 82 - GUJARAT HIGH COURT . Under the circumstances, when the grounds on which the Assessing Officer has sought to reopen the assessment for the Assessment Years 2005-06 and 2006-07 itself do not exist as the same has been set aside by the learned tribunal confirmed by this Court, the impugned notice under Section 148 and reopening of the assessment for the Assessment Years 2005-06 and 2006-07 cannot be further sustained and the same deserves to be quashed and set aside as the cause and the grounds to reopen the assessment for the Assessment Years 2005-06 and 2006-07 do not exist. In view of the above and for the reasons stated hereinabove, both these petitions succeed. The impugned notice under Section 148 of the Income Tax Act to reopen the assessment for the Assessment Years 2005-06 and 2006-07 and the impugned reassessment proceedings for the Assessment Years 2005-06 and 2006-07 are hereby quashed and set aside.

Summary

Issues Involved:
Challenge to impugned notice under Section 148 of the Income Tax Act for Assessment Years 2005-06 and 2006-07.

Analysis:
The petitioner, an urban development authority, filed petitions under Article 226 of the Constitution to challenge the notice issued by the Assessing Officer under Section 148 of the Income Tax Act to reopen assessments for the years 2005-06 and 2006-07. The Assessing Officer alleged that income chargeable to tax had escaped assessment. The petitioner had earlier been registered under Section 12AA of the Income Tax Act and claimed deductions under Section 11 for the years in question. The Assessing Officer later canceled the registration retrospectively based on commercial nature activities, leading to the reopening of assessments. The petitioner objected to the reassessment, citing a tribunal order quashing the cancellation of registration. The High Court confirmed the tribunal's decision, holding that since the grounds for reopening assessments did not exist, the notice under Section 148 and the reassessment proceedings for the years 2005-06 and 2006-07 were quashed and set aside.

Conclusion:
The High Court allowed both petitions, quashing the impugned notice under Section 148 of the Income Tax Act and the reassessment proceedings for the years 2005-06 and 2006-07. The court held that since the basis for reopening assessments had been set aside by the tribunal and confirmed by the court, the notice and reassessment could not be sustained. No costs were awarded in the case.