2016 (4) TMI 529 - HC - Income Tax

Invoking the provisions of Section 142(1) - Could the assessing officer invoke the provisions of Section 142(1) after an order under Section 143(3)(ii) by the appellate forum? - Held that - Section 142 of the Act of 1961 allows the assessing officer to make an enquiry before the assessment. In the present case the assessment was contemplated under Section 143(3)(ii) of the Act of 1961 prior to the issuance of the notice under Section 142 of the Act of 1961. In fact the appellate authority has also proceeded on the basis of the provisions of Section 143(3)(ii) of the Act of 1961. In such circumstances it would not be permissible for the assessing officer to reopen the assessment for the relevant financial year after having assessed it under Section 143(3)(ii) of the Act of 1961. The contention that, there was a mistake in the order of assessment under Section 143 and, therefore, such mistake was sought to be corrected is not available to the Department particularly in view of the fact that, the appellate forum has also proceeded on the basis that an assessment under Section 143(3)(ii) of the Act of 1961 has taken place in respect of the relevant assessment year. The impugned action of the Department in issuing a notice under Section 142 of the Act of 1961 and all consequential steps taken thereundere are set aside. - Decided in favour of assessee

Summary

Issues involved:
Whether the assessing officer can invoke Section 142(1) of the Income Tax Act, 1961 after an order under Section 143(3)(ii) by the appellate forum?

Analysis:

The petitioner filed a return for the assessment year 2002-03 and the assessing officer issued notices under various sections of the Income Tax Act, 1961. The assessment was completed under Section 143(3)(ii) on March 31, 2004, and the petitioner appealed this decision. During the appeal process, the assessing officer issued a notice under Section 142(1) of the Act, which the petitioner contested. The assessing officer threatened to impose penalties under Section 271(1)(b) post-appeal.

The Department argued that there was a mistake in the assessment order under Section 143(3)(i), not (ii), which they corrected under Section 292B, allowing them to invoke Section 142(1). However, both the assessing officer and the appellate forum proceeded under the assumption that the assessment was done under Section 143(3)(ii) for the relevant year.

The Court held that since the assessment was already completed under Section 143(3)(ii) before the notice under Section 142(1) was issued, it was impermissible for the assessing officer to reopen the assessment. The Department's argument about correcting a mistake was dismissed, as both parties proceeded on the basis of Section 143(3)(ii) for the assessment year. Consequently, the Court set aside the Department's actions under Section 142(1) and all related steps.

In conclusion, the petition was allowed, and no costs were awarded in W.P. No. 112 of 2005.