2019 (6) TMI 714 - HC - Income Tax

Validity of reassessment proceedings - claim of depreciation - normal income of the Assessee remains 'Nil', upon which the MAT provisions were applied - HELD THAT - We notice that there is virtually no difference in computation income under MAT provisions in the original assessment as well as in reassessment. Entire exercise therefore would be futile. Only on that ground, Appeal is not entertained and disposed off accordingly.

Summary

Issues:
1. Validity of proceedings initiated under section 147 without holding notice under section 148 as bad in law.
2. Justification of quashing proceedings initiated under section 147 based on information from a previous assessment year.
3. Jurisdiction of Assessing Officer under section 147 compared to remedy under section 154 for rectification.

Issue 1:
The case involved an appeal filed by the Revenue challenging the Income Tax Appellate Tribunal's judgment. The Tribunal quashed proceedings initiated under section 147 without determining the legality of the notice under section 148. The Respondent, a limited company, was assessed under MAT provisions for the assessment year 2006-07. The Assessing Officer reopened the assessment for the previous year 2005-06, disallowing a depreciation claim, and subsequently issued a notice for reassessment for 2006-07. The Tribunal concluded that the Assessing Officer should have used rectification powers under section 154 instead of reopening the assessment.

Issue 2:
The second issue pertained to the justification of quashing proceedings under section 147 based on information from the previous assessment year. The Tribunal found that if adjustments were required due to reassessment for 2005-06, they could have been made using rectification powers under section 154. The Tribunal held that the Assessing Officer exceeded jurisdiction by resorting to reopening the assessment for the subsequent year.

Issue 3:
The final issue revolved around the jurisdiction of the Assessing Officer under section 147 compared to the remedy available under section 154 for rectification. The Counsel for Revenue argued that the power of rectification was not available and the assessment was properly reopened. However, it was highlighted that there was virtually no difference in the computation of income under MAT provisions between the original assessment and the reassessment for 2006-07. The Court found the exercise to be futile and declined to entertain the appeal based on this ground.

In conclusion, the High Court of Bombay dismissed the appeal, emphasizing that the reassessment proceedings were unnecessary as there was no significant variance in the income computation under MAT provisions between the original assessment and the reassessment. The Court highlighted the availability of rectification powers under section 154 as a more appropriate remedy in such cases, indicating that the Assessing Officer had wrongly resorted to reopening the assessment.