Initiation of re-assessment based on material already on record is bad-in-law

IDFC Limited Vs DCIT (Madras High Court)

Madras High Court held that initiation of proceedings for reassessment under section 147 of the Income Tax Act based on material already on record and without new/ tangible information is bad-in-law and liable to be quashed.

Facts- The petitioner in these writ petitions is a Bank and an assessee on the file of the respondents under the provisions of the Income-Tax Act, 1961. The challenge relates to proceedings for re-assessment for assessment years 2014 – 2015 and 2017 – 2018.

Notably, the facts in relation to AY 2014 – 2015 are that an original return of income was filed on 29.11.2014, followed by revised return on 31.03.2016. Even prior to the filing of revised return, notice had been issued on 28.08.2015 u/s. 143(2), to which a response was filed on 29.08.2016. An order of assessment came to be passed under scrutiny on 29.12.2017 which is stated to be pending in appeal before the first appellant authority. On 07.04.2021, a notice u/s. 148 was issued, the officer having reason to believe that income had escaped assessment for that year.

The petitioner complied with the notice by filing return of income on 28.04.2021 and preliminary objections on 19.05.2021 and 23.07.2021. Interalia, it was submitted that the procedure u/s. 148A, substituted by Finance Act, 2021 with effect from 01.04.2021, had not been properly followed by the assessing officer and thus the issue of notice on 07.04.2021 invoking the old provision for re­assessment was bad in law.

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