DCIT Vs Southern Agrifurane –Industries Pvt. Ltd (ITAT Chennai)
The appeals before the Income Tax Appellate Tribunal (ITAT), Chennai ‘C’ Bench, arose from cross-appeals filed by the Revenue and the assessee for Assessment Years (AYs) 2013-14 to 2016-17. The dispute related to reassessment proceedings initiated after a search conducted under section 132 of the Income Tax Act, 1961 on 15.06.2022.
The assessee was engaged in the business of manufacturing and sale of Indian Made Foreign Liquor. During the search, the Revenue claimed to have seized books of account, documents, electronic data, loose sheets, and notebooks. According to the Assessing Officer (AO), the seized material allegedly indicated suppression of income through bogus purchases relating to old liquor bottles and transportation and logistics services.
Based on the search, notices under section 148 were issued on 30.03.2023 for AYs 2013-14 to 2016-17. Reassessment orders under sections 143(3) read with 147 were subsequently passed on 15.03.2024, determining substantially higher total income as compared to the income declared in returns filed in response to the section 148 notices.
Aggrieved, the assessee preferred appeals before the Commissioner of Income Tax (Appeals) [CIT(A)]. Before the CIT(A), a primary legal challenge was raised regarding the validity of initiation of reassessment proceedings, contending that the notices issued under section 148 were barred by limitation in view of the first proviso to section 149 of the Act, as amended by the Finance Act, 2021.
