2012 (4) TMI 474 - HC - Income Tax

Exercise of jurisdiction by the Assessing Officer under Section 147/148 - deduction under Section 33AC and deduction under Section 80IA of the Act - The tribunal has held that the aforesaid reasons to believe do not justify reopening and satisfy the requirements under Section 147/148 of the Act. - Held that - Re-assessment proceedings were initiated by the Revenue, inter alia, stating that income had escaped assessment in respect of so many items. Additions were made on account of as many as six heads - The order passed by the tribunal is cryptic and does not deal with the contentions and the issues raised with reference to the reopening under Section 147 of the Act - the tribunal has not examined and dealt with the said aspect as mandated and required - accept the appeal by the Revenue and pass an order of remand directing the tribunal to decide the issue afresh

Summary

Issues:
1. Validity of exercise of jurisdiction by the Assessing Officer under Section 147/148 of the Income Tax Act, 1961.

Analysis:
The case involved the respondent, a public limited company, filing its income tax return for the assessment year 2001-02, declaring a taxable income of Rs. 48,61,651. The Assessing Officer passed an assessment order under Section 143(3) of the Act, computing the total income at Rs. 2,81,20,170, making adjustments to deductions claimed under Sections 33AC and 80 IA of the Act. Subsequently, the Assessing Officer initiated reassessment proceedings based on various reasons to believe that income had escaped assessment. The tribunal held that the reasons for reassessment did not justify reopening under Section 147/148 of the Act.

Regarding the specific reasons for reassessment, the tribunal observed that issues (a), (b), and (c) were examined during the original assessment and amounted to a change of opinion. For reason (e), the tribunal relied on the proviso to Section 14A, stating that reopening was not permissible for this ground. In the case of reason (f), the tribunal noted that the schedule of depreciation indicated a valid claim by the respondent. The High Court issued a notice on the appeal, focusing only on ground (d) for reassessment.

During the hearing, the appellant referred to previous orders and decisions related to the proviso to Section 14A. The High Court restricted its examination to ground (d) concerning an addition of Rs. 46,23,435 for excess depreciation claimed on plant and machinery. The CIT(A) upheld the addition, stating that the appellant failed to provide sufficient explanation or evidence for the claim. The tribunal's discussion on this aspect was deemed insufficient, leading to the acceptance of the appeal by the Revenue and remand for a fresh decision.

Ultimately, the High Court answered the substantial question of law in favor of the Revenue, limited to the specific issues raised, directing the tribunal to reevaluate the matter based on additional documents provided by the respondent. The decision highlighted the importance of examining the reasons to believe and factual evidence when considering reassessment under Section 147 of the Act.