9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 772 - HC - Income TaxReopening of assessment u/s 147 - Disallowance u/s 14A - HELD THAT - When the appeal had been preferred by Petitioner before the ITAT, and disallowance u/s 14A of the said Act is the subject matter of that appeal, the AO could not have assessed or reassessed such income. Moreover by issuing the notice u/s 148 the AO in fact is sitting in appeal over the decision of CIT(A) to disallow only under Section 14A of the said Act. If he was aggrieved by the decision of CIT(A) to disallow only ₹ 1,82,207/- under Section 14A of the said Act, Revenue could have filed an appeal before ITAT. Having missed the bus, the Assessing Officer cannot adopt the route of re-opening and issue notice under Section 148. - Decided in favour of assessee.
Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2002-2003. 2. Applicability of the provisions of Section 14A of the Income Tax Act in the assessment. 3. Interpretation of the Third proviso to section 147 of the Income Tax Act. Analysis: Issue 1: Validity of notice under Section 148: The petitioner approached the court seeking a Writ of Certiorari to quash the notice dated 20/3/2007 issued under Section 148 of the Income Tax Act, 1961. The notice was based on the belief that interest attributable to borrowed funds used for investments in shares had escaped assessment for Assessment Year 2002-2003. The petitioner argued that the Assessing Officer could not reassess income when the subject matter was under appeal. The court agreed, citing the Third proviso to section 147, which prohibits reassessment on matters under appeal. The court set aside the notice, stating that the Assessing Officer cannot sit in appeal over the decision of CIT(A) and must follow proper appeal procedures. Issue 2: Applicability of Section 14A provisions: The petitioner had filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)) regarding certain additions made in the assessment order. The CIT(A) directed disallowance of a specific amount under Section 14A of the Income Tax Act. The petitioner then appealed to the Income Tax Appellate Tribunal (ITAT). During this appeal process, the notice under Section 148 was issued. The court noted that the Assessing Officer's action in issuing the notice while the matter was under appeal was improper. The court emphasized that if the revenue was dissatisfied with the CIT(A)'s decision, they should have filed an appeal before the ITAT instead of resorting to reopening the assessment. Issue 3: Interpretation of the Third proviso to section 147: The court interpreted the Third proviso to section 147, emphasizing that the Assessing Officer is prohibited from reassessing income that is the subject matter of an appeal. By issuing the notice under Section 148 and attempting to reassess the income, the Assessing Officer was deemed to be sitting in appeal over the CIT(A)'s decision. The court held that proper appeal procedures must be followed, and the Assessing Officer cannot bypass the appeal process by reopening the assessment. In conclusion, the court set aside the notice dated 20/3/2007 under Section 148 of the Income Tax Act, 1961, and quashed the order rejecting objections dated 30/11/2007. The petition was disposed of in favor of the petitioner, emphasizing the importance of following proper appeal procedures and respecting the decisions of appellate authorities.
|
