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2007 (10) TMI 285 - HC - Income TaxReassessment AO passed block assessment order assessing 90 lac as undisclosed income - Block assessment set aside by tribunal observing that addition of Rs. 90 lakhs, would be taxable in the regular assessment of the two companies and not in the regular assessment of the assessee since there was no finding that amount was taxable in hands of assessee, reopening of assessment by invoking section 150 cannot be sustained. Once it is held that section 150 is not applicable, then the reopening of the assessment after 6 years would be time barred
Issues:
Challenging notices under section 148 of the Income-tax Act for assessment years 1997-98 and 1998-99. Analysis: 1. The petitioner, engaged in liquor distribution, challenged notices under section 148 for assessment years 1997-98 and 1998-99, issued based on a search action revealing undisclosed income. The block assessment order added Rs. 90 lakhs as undisclosed income, which was later deleted by the Tribunal in an appeal. 2. The Assessing Officer sought to reopen assessments for 1997-98 and 1998-99 beyond the 6-year limit, citing undisclosed income. The petitioner objected, arguing the Tribunal's finding that such income should be taxed in the companies' hands, not the petitioner's. The Tribunal clarified that additions under sections 68 to 69C should be in regular assessments, not block assessments. 3. The Tribunal's decision implied that the Rs. 90 lakhs should be considered in the companies' regular assessments, not the petitioner's. Therefore, the reassessment notices were challenged as invalid. The Court held that the Tribunal did not direct taxing the amount in the petitioner's regular assessments, leading to quashing of the reassessment notices. 4. The Court ruled that since the Tribunal's finding indicated the income should be taxed in the companies' regular assessments, not the petitioner's, the reassessment notices were invalid. Consequently, the notices issued beyond the 6-year limit were quashed and set aside, favoring the petitioner.
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