This case involves a challenge to an order of re-assessment ...

Taxpayer wins against unlawful re-assessment order due to lack of initial assessment within time limit.

Case Laws     VAT and Sales Tax

August 17, 2024

This case involves a challenge to an order of re-assessment under the relevant tax laws. The key points are: The petitioner failed to submit monthly returns within the prescribed time for the assessment year 2014-2015, leading to an escapement of assessment. The court referred to precedents holding that an assessment cannot be made after the expiry of the prescribed time limit, and that a return must be filed within the time limit for an assessment to be valid. Section 39 of the applicable Act mandates completion of assessment within 5 years from the end of the relevant year. In this case, the assessment for 2014-2015 should have been completed by 31.03.2020, but it was not. Instead, re-assessment proceedings u/s 40 were initiated without completing the initial assessment u/ss 34-37. The court held that the existence of an initial assessment is a prerequisite for re-assessment u/s 40. Since no self-assessment was deemed u/s 35 within the prescribed period, the re-assessment order dated 05.03.2022 and the demand notice dated 08.07.2021 were quashed as illegal and without jurisdiction.

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