2016 (4) TMI 1365 - HC - Income Tax

Reopening of assessment u/s 147 - escapement of income to tax income from M/s. Reliance Petrochemicals Ltd. - HELD THAT - It is beyond our comprehension as to how the RespondentAssessee could have foreseen during the Assessment proceedings that the Assessing Officer will not bring to tax the income alleged to have earned from M/s. Reliance Petrochemicals Ltd. to tax. In any case so far as this Court is concerned it is a settled issue that in the absence of the Assessing Officer bringing to tax any income earned from the source recorded in the reasons as having escaped assessment in support of the impugned notice the Assessing Officer has no jurisdiction to bring to tax income earned/received from any other source by the assessee. This is a jurisdictional requirement as held by this Court in Jet Airways 2010 (4) TMI 431 - HIGH COURT OF BOMBAY . In view of the fact that the issue arising herein stands concluded by the decision of this Court in Jet Airways (supra) no substantial question of law arise for our consideration.

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act, 1961 for Assessment Year 1999-2000 based on correctness of Tribunal's decision on reopening assessment under Section 148 regarding income from Reliance Petrochemicals Ltd.

Analysis:
1. The appeal questions the correctness of the Tribunal's decision on the issue of whether there was an addition in the assessment based on which the proceedings under Section 148 of the Income Tax Act, 1961 were initiated for Assessment Year 1999-2000.

2. The Assessing Officer issued a notice under Section 148 on 31st March, 2005, seeking to reopen the assessment for A.Y. 1999-2000, citing a tax evasion petition regarding income earned from Reliance Petrochemicals Ltd. The reassessment was completed on 20th March, 2006, without adding any income from the said source.

3. The Respondent-Assessee contended that since no addition was made on the income from Reliance Petrochemicals Ltd., the basis of reopening, no other income could be taxed. However, the CIT (Appeals) upheld the Assessing Officer's order.

4. On appeal to the Tribunal, it was held that if no income was assessed based on the reasons for reopening, the Assessing Officer cannot tax any other income. Since no addition was made regarding income from Reliance Petrochemicals Ltd., the Tribunal allowed the appeal.

5. The Revenue's counsel argued that lack of jurisdiction objection was not raised earlier, challenging the application of the decision in CIT Vs. Jet Airways (I) Ltd. The Court emphasized that the Assessing Officer must tax income from the source mentioned in the reasons for reopening.

6. The Court reiterated that in the absence of taxing income from the specified source, the Assessing Officer lacks jurisdiction to tax income from any other source. Citing the decision in Jet Airways case, the Court dismissed the appeal, stating that no substantial question of law arises for consideration.