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2023 (12) TMI 344 - HC - Income TaxReopening of assessment u/s 147 - reassessment order was quashed, concerns the applicability of the third proviso appended to Section 147 - HELD THAT - A careful perusal of the third proviso appended to Section 147 of the Act reveals that the AO is free to assess or reassess such income which is chargeable to tax, provided he has reason to believe that income has escaped assessment, other than income which is the subject matter of any appeal, reference or revision. Therefore, in order to appreciate as to which is the income that the AO cannot subject to assessment or reassessment, one would have to examine the grounds incorporated in the appeal i.e., for AY 2010-11 which the appellant/revenue had preferred with the Tribunal. We may note that identical grounds were raised qua AY 2011-12, except for the difference in the amount that was added to the respondent s/assessee s income u/s 68 of the Act. Clearly, a perusal of the grounds of appeal would show that the appellant/revenue had directed its appeal towards the additions made under Section 68 of the Act. The reassessment proceedings, concededly, also dealt with the additions made under Section 68 of the Act. According to us, while the appeals preferred were pending adjudication with the Tribunal, the AO could not have triggered reassessment proceedings against the additions which were the subject matter of the appeal. The dicta of the two judgments cited by Mr Aggarwal i.e., Commissioner of Income Tax, New Delhi (Central) vs. Edward Keventer (Successors) P. Ltd. 1979 (11) TMI 73 - DELHI HIGH COURT and Alcatel Lucent France vs. ADIT 2016 (6) TMI 301 - DELHI HIGH COURT is squarely applicable. Both judgments enunciate the principle that for zeroing down on matters which the AO cannot subject to assessment or reassessment proceedings under the third proviso to Section 147 of the Act the best way would be to examine the grounds of appeal.
Issues involved:
The judgment concerns the reassessment proceedings triggered against the respondent/assessee under Section 148 of the Income Tax Act, 1961 for Assessment Years (AYs) 2010-11 and 2011-12. The key issue revolves around the applicability of the third proviso appended to Section 147 of the Act in relation to the additions made under Section 68 of the Act. Details of the Judgment: Reassessment Proceedings and Tribunal's Order: The Tribunal quashed the reassessment proceedings initiated against the respondent/assessee under Section 148 of the Income Tax Act, 1961. This decision was based on the third proviso appended to Section 147 of the Act, which restricts the Assessing Officer from reassessing income that is the subject matter of any appeal, reference, or revision. Background and CIT(A)'s Orders: Following additions made to the respondent/assessee's income for AYs 2010-11 and 2011-12, the CIT(A) deleted the additions based on the absence of incriminating material and completed assessments. The CIT(A) relied on a judgment in Commissioner of Income Tax vs. Kabul Chawla. However, the CIT(A) observed that the Assessing Officer lacked jurisdiction to frame an assessment order in the absence of incriminating material. AO's Actions and Tribunal's Decision: The appellant/revenue triggered reassessment proceedings against the respondent/assessee, leading to appeals before the Tribunal. Despite subsequent assessments made by the AO, the Tribunal upheld the CIT(A)'s decision and quashed the reassessment proceedings. Legal Arguments and Conclusion: The appellant/revenue argued for the applicability of Section 148 due to pending appeals before the Tribunal. On the other hand, the respondent/assessee contended that the third proviso to Section 147 applied, citing relevant judgments. The High Court held that the AO could not reassess matters subject to appeal, referencing the grounds of appeal and previous judgments. Consequently, the Court found no substantial question of law warranting interference and closed the appeals. This judgment underscores the importance of the third proviso to Section 147 in limiting the scope of reassessment proceedings and highlights the significance of considering pending appeals when initiating such actions.
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