2013 (7) TMI 264 - HC - Income Tax

Re-assessement - non processing of a claim during scrutiny proceedings - Held that - notice for reopening was issued beyond a period of four years from the end of relevant assessment year - Even as per the Assessing Officer there was no failure on part of the assessee to disclose truly and fully all material facts. In that view of the matter, merely because the claim was not previously processed during the scrutiny assessment or that such claim was perhaps legally not sustainable, would not vest the jurisdiction in Assessing Officer to reopen the assessment - Decided against Revenue.

Summary

Issues:
1. Validity of reopened proceedings under section 147 of the Income Tax Act, 1961.
2. Allowance of carry forward of unabsorbed depreciation under section 32 beyond eight assessment years.

Analysis:
1. The High Court considered two main issues raised by the Revenue in the appeal. Firstly, the validity of the reopened proceedings under section 147 of the Income Tax Act, 1961, beyond the four-year period from the end of the relevant assessment year. The Assessing Officer disallowed a sum in the original assessment, which led to the reopening of the proceedings. The Court noted that there was no failure on the part of the assessee to disclose all material facts. The Court emphasized that the mere fact that a claim was not previously processed during scrutiny assessment does not give jurisdiction to reopen the assessment. The Court held that the Assessing Officer lacked jurisdiction to reopen the assessment, and the Tribunal's decision declaring the proceedings under section 147 invalid was upheld.

2. The second issue revolved around the Tribunal's decision on the carry forward of unabsorbed depreciation under section 32 beyond eight assessment years. The Tribunal allowed the assessee's appeal on this count. However, the High Court did not delve into this issue on merits as it had already upheld the invalidity of the proceedings under section 147. The Court dismissed the Revenue's appeal, emphasizing that since the reopening proceedings were deemed invalid, the question of the carry forward of unabsorbed depreciation beyond eight years was not examined on its merits.

In conclusion, the High Court dismissed the Tax Appeal, affirming the Tribunal's decision on the invalidity of the proceedings under section 147 and refraining from examining the issue of the carry forward of unabsorbed depreciation beyond eight assessment years due to the lack of jurisdiction resulting from the invalid reopening of the proceedings.