2019 (10) TMI 82 - HC - Income Tax

Reopening of assessment u/s 148 - whether the impugned notice issued by the respondent under section 148 of the Act is sustainable in law? - HELD THAT - It is not in dispute that the income which is sought to be reassessed by virtue of the issue of the impugned notice under section 148 of the Act was already assessed and was the subject matter of appeal before the CIT(A). The matter is now pending before the ITAT. In such circumstances, the assessment which is sought to be reopened could be said to have merged with the order of Commissioner (Appeals). By virtue of the second proviso to section 147 of the Act, income involving matters which are subject matters of any appeal, reference or revision has expressly been taken out of the purview of the said section. In the circumstances, insofar as the income stated to have escaped assessment under the second ground is concerned, the same having been subject matter of appeal would not fall within the ambit of section 147 and as such the Assessing Officer lacks jurisdiction to reopen the assessment on the said ground. See NATIONAL DAIRY DEVELOPMENT BOARD VERSUS DCIT 2011 (3) TMI 1391 - GUJARAT HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Challenge to notice of reassessment under section 148 of the Income-tax Act, 1961.

Analysis:
The petitioner, an assessee under the Income Tax Act, challenged a notice dated 30.3.2018 under section 148 for reassessment proceedings. The petitioner had undergone a thorough scrutiny assessment previously, which included an addition under section 69 towards investment in a flat. The CIT (Appeals) had deleted this addition, and the matter was pending before the Tribunal. The respondent issued a notice under section 148 based on information from a search conducted at the premises of a related group. The petitioner argued that the reassessment proceedings lacked jurisdiction and that a reasoned sanction under section 151 was required. The respondent rejected the petitioner's objections, leading to the challenge in the High Court.

The main ground of challenge was that the income sought to be reassessed had already been assessed and was the subject of appeal before the CIT (Appeals). The High Court considered the principle of "merger" and cited a previous decision where it was held that the Assessing Officer cannot reassess income that is already the subject of appeal or has been assessed. The Court also referred to another case where it was established that the Assessing Officer lacks jurisdiction to reopen assessments that are subject to appeal. Based on these precedents, the High Court quashed the impugned notice issued under section 148 of the Act.

In conclusion, the High Court held that the impugned notice of reassessment under section 148 lacked validity and could not be sustained. Citing previous judgments, the Court emphasized that the Assessing Officer cannot reassess income that has already been assessed or is the subject of appeal. Therefore, the High Court allowed the petition, quashed the notice dated 30/3/2018, and made the rule absolute with no order as to costs.