2014 (7) TMI 690 - HC - Income Tax

Reassessment proceedings u/s 147 Proceedings already set aside in earlier assessment year on similar facts Held that - The initiation of the reassessment proceedings with respect to the AY 2005-06 has been set aside, which were sought to be initiated on the ground on which the reassessment proceedings by observing that there was no failure on the part of the assessee to disclose truly and fully all material facts - the reassessment proceedings for the AY 2005-06 with respect to the very assessee, which were sought to be initiated on the very ground on which the reassessment proceedings are initiated for the subsequent AY 2006-07 and 2007-08 are set aside by the Court and the facts are similar to that of the AY 2005-06, the reassessment proceedings for the AY 2006- 07 and 2007-08 deserve to be quashed and set aside Decided in favour of Assessee.

Summary

Issues:
Reassessment proceedings for Assessment Years 2006-07 and 2007-08 challenged by the petitioner-assessee, based on the cancellation of banking license and winding up process, initiated beyond the prescribed period.

Analysis:
The High Court heard the case concerning reassessment proceedings for the Assessment Years 2006-07 and 2007-08 initiated against a cooperative bank in liquidation. The petitioner initially contested the reassessment for the mentioned years, which were later challenged after the Assessing Officer passed the reassessment orders during the proceedings. The Assessing Officer cited reasons for initiating reassessment, highlighting the cancellation of the bank's license by the Reserve Bank of India and the ongoing winding-up process by the Official Liquidator. The Assessing Officer argued that the bank was not engaged in any business activities post-Assessment Year 2004-05, leading to income from other sources. The petitioner objected to the reassessment, citing a previous judgment quashing similar proceedings for the Assessment Year 2005-06 due to a delay in initiation. Despite objections, the Assessing Officer proceeded with reassessment, prompting the petitioner to file Special Civil Applications challenging the orders.

The petitioner's advocate contended that the reassessment for the subsequent years should not have been initiated based on grounds previously quashed by the court. The Division Bench had earlier set aside reassessment proceedings for the Assessment Year 2005-06 due to the bank's disclosed information and no failure to disclose material facts. The High Court, considering the previous judgment and the similarity of facts, decided to quash and set aside the reassessment proceedings for the Assessment Years 2006-07 and 2007-08. The court emphasized that since the grounds for reassessment were the same and initiated beyond the prescribed period, the proceedings were unjustified. The reassessment orders for the mentioned years were consequently annulled, ruling in favor of the petitioner. The court concluded the judgment without imposing any costs on either party.