2014 (7) TMI 14 - HC - Income Tax

Revision u/s 263 - commencement of period of limitation from the date of original assessment or date of reassessment u/s 147 - revenue contended that AO failed to consider new ground during the course of reassessment proceedings which were not included in the notice u/s 148 and therefore the order is erroneous and prejudicial to revenue - Held that - The Commissioner of Income Tax was aware that the period of limitation provided for in sub-section (2) of section 263 would commence from the date of original assessment which is on 22nd March, 2004 - The order of the Commissioner of Income Tax under section 263 of I.T. Act, is dated 30th March, 2009. It is in these circumstances, that we are of the opinion that the finding of fact recorded by the Tribunal on the point of the limitation, cannot be said to be vitiated by an error of law apparent on the face of the record nor it can be termed as perverse. no substantial question of law arises for consideration - there is no question of explanation (3) being noticed by the Tribunal Decided against revenue.

Summary

Issues:
Challenge to the order of the Income Tax Appellate Tribunal regarding the assessment year 2001-2002 under the Income Tax Act.

Analysis:
The High Court heard the revenue's appeal challenging the Tribunal's order setting aside the Commissioner of Income Tax's order under section 263 of the Income Tax Act for the assessment year 2001-2002. The appellant's counsel argued that the Tribunal overlooked Explanation(3) inserted in section 147 of the Income Tax Act, allowing the Assessing Officer to assess or reassess income on any issue that escaped assessment. The counsel contended that the reasons for reopening were included in the notice issued on 9th June 2005, and thus, the Tribunal's view raised a substantial question of law. However, the Court disagreed, stating that the original assessment was completed in 2004, and the case was reopened in 2006 due to under-assessment of book profit. The Commissioner of Income Tax found errors in the reassessment, leading to the conclusion that the original order was prejudicial to the revenue's interest. The Tribunal upheld the assessee's appeal based on the limitation period starting from the original assessment date. The Court held that the Tribunal's finding on the limitation point was not vitiated by any legal error and did not raise a substantial question of law. The Court dismissed the appeal, noting the peculiar facts of the case and the absence of relevance of Explanation(3) in this scenario.