2014 (5) TMI 589 - HC - Income Tax

Validity of reassessment u/s 148 of the Act - Concealment or suppression of material facts Held that - There was no fresh or tangible material - the only ground on which reassessment can be made u/s 148 pursuant to the declaration of law in Commissioner of Income Tax, Delhi Versus M/s. Kelvinator of India Limited 2010 (1) TMI 11 - SUPREME COURT OF INDIA the reassessment notice and the final order rejecting the objections and the consequential reassessment order is set aside - the AO has no power to review - he has the power to re-assess - Decided in favour of Assessee.

Summary

Issues:
Reassessment notice under Section 148 for AY 2005-06 based on alleged inaccurate particulars provided by the assessee regarding premium payments to LIC and leasehold improvements.

Analysis:

The petitioner challenged a reassessment notice under Section 148 for the assessment year 2005-06, contending that there was no concealment of facts in the original return. The reasons for reopening the assessment included alleged inaccurate particulars furnished by the assessee related to premium payments to LIC and leasehold improvements. The Revenue claimed that the income chargeable to tax had escaped assessment due to these inaccuracies.

The petitioner argued that appropriate responses were provided to the queries regarding premium payments made to LIC for gratuity and superannuation, and the AO had approved these expenditures. Additionally, the petitioner claimed that the amount deducted for leasehold improvements was treated as revenue expenditure, and depreciation was claimed accordingly. The petitioner further contended that the reassessment was completed without serving the notice or the order rejecting the objections raised by them.

Upon examination of the records, it was found that the notice was not served after the reassessment was open, and there was no evidence to show that the order dated 4.12.2012 was served on the petitioner. It was acknowledged that the issues of premium payments and leasehold improvements were already subject to inquiry during the original assessment.

The Court, considering the circumstances, held that there was no fresh or tangible material to support the reassessment as required under Section 148. Citing the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator (India) Ltd., 320 ITR 561, the Court concluded that the reassessment notice, the order rejecting objections, and the subsequent reassessment order were invalid in law. Therefore, the Court quashed and set aside the reassessment notice and the final order.

In conclusion, the writ petition was allowed, and the reassessment notice and subsequent orders were declared unlawful and set aside based on the lack of new material to support the reassessment under Section 148.