INCOME TAX ACT, 1961

Section 147

Reassessment - Reopening based on rectification notice - Notice issued under section 154 by AO was neither dropped nor culminated -

Assessee had filed his return of income and original assessment was framed by the AO. Subsequently, the case of the assessee was reopened under section 147 for the reason, that though assessee had earned an exempt income however, no disallowance was made under section 14A read with rule 8D. Assessment was thereafter framed by AO wherein he made disallowance under section 14A read with rule 8D. Assessee submitted that AO after framing the assessment under section 143(3) had issued notice under section 154 wherein he had sought to disallow under section 14A read with rule 8D attributable to exempt income earned by the assessee. Held: Notice issued under section 154 by AO was neither dropped nor culminated in an order till date. Accordingly, the support drawn by assessee that having issued a notice under section 154 which thereafter was dropped/vacated by AO, the case of the assessee on the very same basis cannot be reopened under section 147 would be of no avail in the backdrop of the facts involved in the case. In the case of Nawany Corp. (I) Ltd. v. ITO (2012) 33 CCH 345 (Mum), proceedings under section 154 were stated to have been concluded after the assessee had submitted its reply. The contention of assessee that AO having issued a notice under section 154 could not have on the same basis validly reopened its case under section 147, was, dismissed.

Followed:Berger Paints India Ltd. v. Asstt. CIT and Others (2010) 322 ITR 369 (Cal) : 2010 TaxPub(DT) 0754 (Cal-HC) and Nawany Corp. (I) Ltd. v. ITO (2012) 33 CCH 345 (Mum)

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 14A

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