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2016 (10) TMI 170 - HC - Income TaxReopening of assessment - applicability of Section 115JB on assessee - Held that - As the reopening of notice itself has been held to be without jurisdiction on account of first proviso to Section 147 of the Act and as there was no failure on the part of the Respondent Assessee to disclose fully and truly all material facts necessary for Assessment. The reopening notice itself was issued by the Revenue on the basis that Section 115JB of the Act was applicable to the Respondent Assessee and yet in view of the first proviso to Section 147 of the Act, the notice was bad. Therefore, for the purpose of present Appeal, there is no need to examine the applicability of Section 115JB of the Act in respect of the Respondent as it is Banking Company. This question would have only assumed importance if the reopening notice was within jurisdiction. In the above facts, we have not examined the applicability of Section 115JB of the Act to Banking Companies.
Issues involved:
1. Validity of the reopening of assessment under Section 148 of the Income Tax Act, 1961. 2. Applicability of Section 115JB of the Income Tax Act, 1961 to the assessee. 3. Whether the assessee is a company under Section 2(17) of the Income Tax Act, 1961. Analysis: Issue 1: Validity of the reopening of assessment The respondent-assessee filed its return of income for the Assessment Year 2005-06, declaring a loss. Subsequently, a notice under Section 148 of the Act was issued to reopen the assessment due to specific adjustments resulting in a short computation of book profit. The assessee objected to the reopening, citing jurisdictional issues and contending that Section 115JB of the Act did not apply to Banking Companies. The Assessing Officer rejected the objection, leading to an appeal to the CIT(A) and subsequently to the Tribunal. Both the CIT(A) and the Tribunal held that the reopening notice was beyond the permissible four-year period and lacked any failure on the part of the assessee to disclose material facts, rendering the proceedings invalid. The Tribunal also upheld that Section 115JB did not apply to the assessee as a Banking Company, dismissing the Revenue's appeal. Issue 2 & 3: Applicability of Section 115JB and company status The Tribunal's decision on the reopening notice's invalidity made the questions regarding the applicability of Section 115JB and the company status of the assessee academic. The reopening notice was issued based on the assumption that Section 115JB applied to the assessee, but its invalidity under the first proviso to Section 147 of the Act rendered these questions moot. Therefore, the Tribunal did not delve into the applicability of Section 115JB to Banking Companies. As a result, the Tribunal concluded that these issues did not give rise to any substantial questions of law and were dismissed without further examination. In summary, the High Court dismissed the appeal challenging the Tribunal's order, emphasizing the invalidity of the reopening notice due to jurisdictional constraints and lack of failure to disclose material facts. The Court did not entertain questions regarding the applicability of Section 115JB to the assessee as a Banking Company, as the reopening notice itself was deemed invalid.
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