2003 (5) TMI 216 - AT - Income Tax

Summary

Issues Involved:
1. Validity of reassessment proceedings under section 147.
2. Time-barred initiation of reassessment proceedings.
3. Validity of notice under section 148.
4. Deduction under section 80HH.
5. Charging of interest under sections 234A, 234B, and 234C.

Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147:
The appellant challenged the reassessment proceedings initiated under section 147, arguing that the reassessment was merely a change of opinion based on the same facts previously considered. The appellant had disclosed all basic and material facts during the original assessment, including a notification and a certificate from NOIDA authorities. The Assessing Officer (AO) had accepted the claim for deduction under section 80HH based on these documents. However, the AO later discovered that the notification relied upon by the appellant was false, as the authentic notification excluded Bisrakh Block from the list of backward areas. The Tribunal held that the AO had a rational belief based on the authentic notification and that the appellant had failed to disclose material facts truly and correctly. Therefore, the reassessment proceedings were valid and not a mere change of opinion.

2. Time-Barred Initiation of Reassessment Proceedings:
The appellant contended that the reassessment proceedings were time-barred as per the proviso to section 147, which restricts action after four years from the end of the relevant assessment year. The reassessment proceedings for the assessment year 1992-93 were initiated on 9-12-1999, beyond the four-year limit. However, the Tribunal found that the income had escaped assessment due to the appellant's failure to fully and truly disclose all material facts. Therefore, the proviso to section 147 did not apply, and the action was within the limitation period prescribed under section 149. Consequently, the ground of the appellant was rejected.

3. Validity of Notice under Section 148:
The appellant argued that the notice under section 148 was not served correctly, as it was not addressed to the Principal Officer and was sent by speed post instead of registered post. The Tribunal noted that the appellant had not pressed this issue during the remand proceedings and had taken notice of the reassessment proceedings. The Tribunal held that the service of notice by speed post was valid and that the absence of the Principal Officer's name was a minor irregularity that did not prejudice the appellant's interests. Therefore, the ground challenging the validity of the notice was dismissed.

4. Deduction under Section 80HH:
The appellant claimed that the CIT(A) had not adjudicated on the deduction under section 80HH. The Tribunal found that the CIT(A) had indeed rendered a decision, upholding the AO's action of disallowing the excess claim under section 80HH. Therefore, the Tribunal dismissed the appellant's ground on this issue.

5. Charging of Interest under Sections 234A, 234B, and 234C:
The appellant contended that the AO had charged interest under sections 234A, 234B, and 234C without making a specific order or mentioning the statutory provisions. The Tribunal referred to the Supreme Court's decision in CIT v. Ranchi Club Ltd., which held that charging interest without a specific order was unjust. Consequently, the Tribunal directed the deletion of the interest charged under these sections.

Conclusion:
The appeal of the assessee was partly allowed. The Tribunal upheld the validity of the reassessment proceedings and the notice under section 148, dismissed the appellant's grounds on the time-barred issue and deduction under section 80HH, but directed the deletion of interest charged under sections 234A, 234B, and 234C.