INCOME TAX ACT, 1961

Section 150, 147

Reassessment - Validity - Time limit -

Assessee claimed to have started production of RMPU's, in Selaqui Unit during financial year 2007-08, and claimed deduction of profits, under section 80-IC, in concerned assessment year, 2008-09. The claim was rejected by AO, on the ground of violation of conditions prescribed in section 80-IC (4)(ii). Assessee preferred appeal before CIT(A), against order of AO and succeeded therein. As a result deductions claimed by assessee under section 80-IC, were allowed. The order of CIT(A), was challenged by revenue, before 'ITAT'. In the meanwhile, assessee's case for assessment year 2009-10 was also selected for scrutiny on the same ground i.e. deductions claimed under section 80-IC. Assessee requested AO to follow order of CIT(A), as same was binding upon him. The concerned AO acceded to assessee's request and completed assessment for assessment year 2009-10, without disallowing deduction under section 80IC. Subsequently, vide Order, dt. 16-1-2017, ITAT, reversed findings of CIT(A) w.r.t. assessment year 2008-09 and allowed departmental appeal in favour of revenue. In this background, AO issued the impugned Notice under section 148/150, dt. 25-3-2017, for assessment year 2009-10. Assessee raised objections against reasons provided by revenue for reopening assessment, which were rejected, reiterating that reopening of assessment was necessary and obligatory in consequence of and in order to give effect to, finding or direction contained in the Order, dt. 16-7-2019, passed by the ITAT. Assessee contended that in terms of section 149 notice under section 148 could have been issued within a maximum period of 6 years from the end of relevant assessment year 2009-10. Which ended on 31-3-2016 and invocation of section 150, on the premise of giving effect to finding/direction contained in the order passed by the ITAT, w.r.t. assessment year 2008-09, was not valid and did not justify extension of limitation of six years to re-open assessment. Held: While it is true that ITAT, could not have given a finding in respect of an assessment year which was not the subject-matter of appeal before it. However, in the instant case finding could not be considered as relevant and limited only to assessment year 2008-09 as findings of the ITAT, were not incidental observations but categorical findings of fact germane for determination of claim of assessee, for deduction under section 80-IC also relevant for assessment year 2009-10, These findings fell within the scope of section 150, as same were necessary for disposal of appeal before appellate authority for assessment year 2008-09. As legislature has designedly not placed any time limit under section 150, reading a period of limitation into it, would be incorrect approach and date relevant for deciding question of limitation in terms of section 150(2) would be the date of order of CIT(A) which was passed on 5-10-2011 and was the subject matter of appeal. Thus, limitation of six years under section 149, must be alive on date of passing of order of CIT(A). In the instant case since, as on 5-10-2011, time limit for reopening of assessment for assessment year 2009-10 had not lapsed, order of the ITAT, was well within limitation and in view of the same reopening of assessment under section 147, read with section 150, was within the period of limitation.

SUBSCRIBE FOR FULL CONTENT