INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Disallowance of deduction claimed under section 36(1)(viia) - Objection filed by assessee was not disputed by AO

The return of income filed by the assessee was subjected to scrutiny and after calling for various details and examining them, AO completed the assessment under section 143(3) determining the total income. AO having reason to believe that the income chargeable to tax in the assessment year under dispute had escaped assessment, re-opened the assessment under section 147 by issuing a notice under section 148. AO completed the assessment under section 143(3) read with section 147 disallowing deduction claimed under section 36(1)(viia). Held: Undisputedly, in response to the notice issued under section 148, assessee after necessary compliance filed an objection before AO challenging the validity of re-opening of assessment. It was a fact on record that the objection filed by the assessee raising such a vital issue has not been disposed of by AO independently prior to completion of assessment under section 143(3) read with section 147. This action of AO again was in violation of law laid down by Supreme Court in GKN Driveshafts (India) Ltd. v. ITO & Ors., (2002) 259 ITR 19 (SC) : 2003 TaxPub(DT) 734 (SC). Thus, there was no hesitation in holding that initiation of proceeding under section 147 was invalid.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 1999-2000

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