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2018 (6) TMI 1124 - HC - Income TaxReopening of assessment - first appellate authority directed reduction of 90% of only net processing charges to the total turnover - Held that - The cross-objection was allowed granting the relief by setting aside the orders of the lower authorities finding that re-assessment could not be taken up under Section 147. Hence as of now there is no appeal from the order which interfered with assessment and the first appellate order, on grounds of invalidity of a re-assessment under Section 147. The returns originally filed was in accordance with the declaration of law of this Court in CIT v. K.Rajendranathan Nair, 2003 (2) TMI 15 - KERALA HIGH COURT . The said decision was reversed by the Honourable Supreme Court in CIT v. K.Ravindranathan Nair, 2007 (11) TMI 10 - SUPREME COURT OF INDIA . There could hence be no suppression found as held by the Honourable Supreme Court in Deputy Commissioner of Income Tax v. Simplex Concrete Piles (India) Ltd., (2012 (9) TMI 516 - SUPREME COURT). In such circumstances, we refuse to answer the questions of law, especially on the ground that there is no appeal filed from the order which allowed the cross-objection of the assessee. - Appeal dismissed.
Issues:
1. Validity of reassessment under Section 147 read with Section 148 of the Income Tax Act, 1961. 2. Reduction of processing charges and turnover adjustments. 3. Application of law in relation to the original return filed by the assessee. Issue 1: Validity of reassessment under Section 147 read with Section 148: The appellant, the Commissioner of Income Tax, challenged the Tribunal's order setting aside the reassessment under Section 147 read with Section 148 of the Income Tax Act, 1961, citing no suppression of material facts. The re-assessment was initiated within the four-year period as per Section 147, based on the income chargeable to tax escaping assessment due to failure to disclose all material facts necessary for assessment. The Tribunal ruled in favor of the assessee, stating that there was no absence of disclosure of true and complete material facts, thereby rejecting the re-assessment. The Revenue appealed on questions of law, but the High Court dismissed the appeal, noting that there was no appeal against the order allowing the cross-objection of the assessee, leading to the dismissal of the instant appeal. Issue 2: Reduction of processing charges and turnover adjustments: The assessing authority reduced 90% of the gross processing charges and added them to the total turnover. The first appellate authority directed a reduction of 90% of only net processing charges. The Department's appeal against this decision was rejected, and the assessee's cross-objection was allowed, setting aside the lower authorities' orders. This led to the conclusion that the reassessment under Section 147 was invalid, as there was no appeal challenging the order interfering with the assessment and the first appellate order on the grounds of re-assessment invalidity. Issue 3: Application of law in relation to the original return filed by the assessee: The returns originally filed by the assessee were in line with the law declared by the Court in a previous case. However, this decision was later overturned by the Supreme Court. The High Court noted that there was no suppression of material facts based on the Supreme Court's ruling in a related case. The High Court refused to answer the questions of law raised by the Revenue, emphasizing the absence of an appeal against the order allowing the cross-objection of the assessee, leading to the dismissal of the appeal. In conclusion, the High Court upheld the Tribunal's decision to set aside the reassessment under Section 147 read with Section 148, emphasizing the importance of disclosing all material facts for assessment purposes and highlighting the impact of legal precedents on tax filings and reassessment procedures.
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