INCOME TAX ACT, 1961

Section 148

Reassessment - Reason to believe - Assessment originally completed was in ignorance of binding decision of supreme court -

Revenue was aggrieved by order of the Tribunal rejecting its appeal. Assessee had questioned the reassessment proceedings under sections 147/148 on the ground that reasons to re-open the assessment proceedings for assessment year 2002-03 amounted to a second opinion or review of the previous view expressed. Assessee was subjected to scrutiny proceedings under section 143(3). Its claim under section 37(1) for allowance of capital expenditure by way of royalty in lieu of technical knowledge and depreciation of fixed assets was allowed. Later, reassessment proceedings were initiated on the premise that scrutiny assessment originally completed, was in ignorance of a binding decision of Supreme Court in Southern Switchgears Ltd. v. CIT (1998) 232 ITR 359 (SC) : 1998 TaxPub(DT) 1053 (SC). Held: CIT(A) concurred with the view of AO, however, Tribunal, held that since this scrutiny assessment had gone into the taxability of amounts in question, AO could not have revisited the same issue on the pretext that a binding decision was overlooked. This Court was of the opinion that order was sound and reasonable and in accord with the judgment of Supreme Court. Where reassessment proceedings were sought to be initiated on the ground of expenditure wrongly allowed in ignorance or overlooking Southern Switchgears (1998) 232 ITR 359 (SC) : 1998 TaxPub(DT) 1053 (SC), the Court in Xerox Modicorp Ltd. v. DCIT (2013) 350 ITR 308 (Del) : 2013 TaxPub(DT) 0493 (Del-HC) held that reassessment proceedings were unauthorised in law.

REFERRED : CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC) Xerox Modicorp Ltd. v. Dy. CIT (2013) 350 ITR 308 (Del) : 2013 TaxPub(DT) 0493 (Del-HC) Southern Switch Gear Ltd. v. CIT (1998) 232 ITR 359 (SC) : 1998 TaxPub(DT) 1053 (SC)

FAVOUR : In assessee's favour

A.Y. :

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