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TMI Blog2016 (11) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... rn for the assessment year 2007-08 was filed by the petitioner on October 31, 2007 declaring income of Rs. 2,68,82,20,341. It was selected for scrutiny and after verification/examination draft assessment order under section 143(3)/144C(1) of Act, 1961 was passed on December 27, 2010 proposing some disallowances and addition of income of Rs. 61,00,79,579 being subsidy by way of sales tax incentive received under the scheme formulated by the Government of Uttar Pradesh. The Assessing Officer (hereinafter referred to as the "AO") suggested that it is "revenue receipt" and not "capital receipt" as claimed by the petitioner though in Maharashtra a similar incentive was treated as "capital receipt". 5. Aggrieved by draft assessment order dated December 27, 2010 petitioner filed objection before dispute resolution panel (hereinafter referred to as the "DRP"), whereupon direction under section 144C(5) was issued on September 27, 2011 to the Assessing Officer to pass final order. The Assessing Officer thereafter made final assessment on October 31, 2011 assessing total income to Rs. 5,83,91,17,785 after making addition of Rs. 61,00,79,579 on account of sales tax incentive treating it as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988, by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A ; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120 ; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner ; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 has been issued raising an issue which relates to not the reassessment order but the original assessment order dated October 31, 2011 and, therefore, it is barred by limitation. Reliance is placed on CIT v. Alagendran Finance Ltd. [2007] 293 ITR 1 (SC) ; CIT v. Bharti Airtel Ltd. [2013] 37 taxmann.com 218 (Delhi) ; CIT v. Shriram Engineering Construction Co. Ltd. [2011] 330 ITR 568 (Mad) ; Ashoka Buildcon Ltd. v. Asst. CIT [2010] 325 ITR 574 (Bom) ; CIT v. Lark Chemicals Ltd. [2014] 368 ITR 655 (Bom) and CIT v. ICICI Bank Ltd. [2012] 343 ITR 74 (Bom). 15. Per contra, learned standing counsel submitted that sections 2(8) and 2(40) of the Act, defines terms "assessment" and "regular assessment". Assessment includes reassessment. Assessment made under section 143 or 144 is termed as "regular assessment", therefore, it does not include reassessment made under section 147. The meaning of "assessment", therefore, has to be seen in this context. 16. It is submitted that for the purpose of section 263 the period of two years is from the date of "assessment" and if read with section 2(8) it would be the date of "reassessment" and not "original assessment". It is contended that any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer made addition of Rs. 13,89,59,995 under section 40(a)(ia) of the Act, 1961 bringing total assessed income to Rs. 5,97,80,77,790. Thus "reassessment" order was not for review or reassessment of entire case but only in respect of a particular item, i.e., transactions outside India on which no tax was deducted at source, hence were disallowable under section 40(a)(ia). In all other respect, original assessment order was maintained, and addition made by the reassessment order dated March 26, 2015 was added in the income assessed in "original assessment" order and that is how it comes to Rs. 5,97,80,77,790. This is also evident from operative part of "reassessment" order of the Assessing Officer, which reads as under : "After due verification of available facts and records and examination of the assessee's submissions, income of the assessee is computed as under : Income as per order under section 143(3),144C dated October 31, 2011 Rs. 583,91,17,790 Addition as per para. 2 above Rs. 13,89,59,995 Assessed income Rs. 597,80,77,785 Or say Rs. 597,80,77,790" 22. Now the notice under section 263(1) shows that the respondent, though has referred to the "reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of section 263 of the Income-tax Act, 1961 (for short "the Act"), the date of order of assessment or that of the reassessment, is to be taken into consideration ?" (emphasis added) 27. Therein also for the assessment years 1994-95, 1995-96 and 1996-97, assessment was completed on February 27, 1997; March 12, 1997 ; and March 30, 1998, respectively. In all the assessment years, the assessee's return under the head "Lease equalisation fund" was accepted. The Assessing Officer initiated reassessment proceedings under section 148 in respect of the following three items : "(i) the expenses claimed for share issue, (ii) bad and doubtful debts and (iii) excess depreciation on gas cylinders and goods containers." 28. Reassessment has nothing to do on items relating to "lease equalization fund". The Commissioner of Income-tax invoked revisional jurisdiction under section 263(3) vide notice dated March 29, 2004 stating that depreciation of leased assets claimed as goods depreciation and disallowed in computation income was not correct and order of the Assessing Officer is prejudicial to the interests of the Revenue as the lease rentals had not been properly broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 'non-assessment' as well as 'under assessment'. Income is said to have 'escaped assessment' within the meaning of this section when it has not been charged in the hands of an assessee in the relevant year of assessment. The expression 'assess' refers to a situation where the assessment of the assessee for a particular year is, for the first time, made by resorting to the provisions of section 147 because the assessment had not been made in the regular manner under the Act. The expression 'reassess' refers to a situation where an assessment has already been made but the Income-tax Officer has, on the basis of information in his possession, reason to believe that there has been under assessment on account of the existence of any of the grounds contemplated by the provisions of section 147(b) read with Explanation (1) thereto." (emphasis added) 31. Referring to above exposition of law, court in CIT v. Alagendran Finance Ltd. (supra) further held (page 9 of 293 ITR) : "There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment will be held to be set aside and the whole proceedings would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors. These issues were different from the subject matter of reassessment order. The Delhi High Court held that the subject matter is different since the Commissioner has found error in regular assessment order, hence limitation shall commence for regular assessment order. 34. To the same effect is the Division Bench judgment of the Bombay High Court in Ashoka Buildcon Ltd. v. Asst. CIT (supra) delivered by Dr. D. Y. Chandrachud, J., (as his Lordship then was). Therein, the Commissioner of Income-tax issued notice dated April 30, 2009 under section 263. The assessment order was passed on December 27, 2006 under section 143(3) for the assessment year 2004-05. It was sought to be reopened on March 6, 2007 in regard to benefit of section 72A which deals with carry forward and set off of accumulated losses and unabsorbed depreciation allowances in cases, inter alia, of amalgamation and merger was wrongly allowed. The Commissioner of Income-tax issued notice dated April 30, 2009 under section 263 though referring to reassessment order but in effect pointing out an error in regular assessment order dated December 27, 2006. Relying on CIT v. Alagendran Finance Ltd. (supra), Bombay High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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