2016 (6) TMI 742 - HC - Income Tax

Reopening of assessment - period of limitation - Held that - . In view of the provisions of Section 150 (1) and 150 (2), on the basis of which order came to be passed on 5.11.2008, limitation was over on 31.3.2008, therefore, Special Civil Application is required to be allowed in favour of assessee

Summary

Issues:
Challenge to impugned notices for assessment years 2001-02 and 2002-03.

Analysis:
The petitioner, a limited company, challenged impugned notices issued for scrutiny assessment years 2001-02 and 2002-03. The company's return of income was selected for scrutiny, and after providing details and attending assessment proceedings, assessment orders were framed. Appeals before CIT (A) were partly allowed. Subsequently, the respondent issued notices under Section 148 to reopen assessments for both years. The petitioner filed revised returns and requested reasons for reassessment, which were provided, leading to objections raised by the petitioner. The respondent disposed of objections without addressing the contentions, prompting the petitioner to file petitions before the High Court.

The petitioner contended that notice under Section 148 cannot be issued for reopening beyond six years from the end of the relevant assessment year, with exceptions under Section 150(2) of the Act. The petitioner argued that the respondent could not issue notices for more than one reason. The petitioner highlighted discrepancies in the depreciation claim for the year 2001-02, emphasizing that the assessment order allowed depreciation initially but was later disallowed by CIT (A). The petitioner challenged the validity of the notices based on the timing of issuance, citing the decision in Commissioner of Income Tax v. Green World Corporation.

The respondent defended the reassessment proceedings, asserting the correctness of reopening the assessments based on the claim of depreciation on technical knowhow. The authority rejected the petitioner's contentions, stating that the reassessment was valid and justified. The respondent argued for the dismissal of the petition.

Upon hearing both parties, the Court considered the provisions of Section 150(1) and 150(2) in deciding the validity of the impugned notices. The Court found that the limitation period had expired for one petition, requiring its allowance. For the other petition, the Court noted the lack of material to support the notices issued for the assessment years 2001-02 and 2002-03. Consequently, the Court accepted the petitioner's contentions, allowed both petitions, and quashed the impugned notices. The Court also mentioned that the order of CIT (A) had been quashed by the Tribunal and remanded back to the Assessing Officer.