Case Law Details
CIT Vs Infinity Infotech Parks Ltd (Calcutta High Court)
The Court : Supplementary Affidavit, pursuant to the leave granted on 25th August, 2014, filed in Court, be kept on record. Heard Mr. S.B. Saraf, learned advocate for the appellant.
This appeal has been preferred by the appellant from an order dated 20th December, 2013 passed by the Income Tax Appellate Tribunal ‘C’ Bench, Kolkata in ITA No. 1316/Kol/2012 for the assessment year 2006-2007 on the following questions :
“a) Whether the learned Tribunal erred in law in not appreciating that upon formation of the reason to believe that income chargeable to tax has escaped the assessment, the Assessing Officer is empowered to assess or to reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the provisions of section 147 of the said Act ?
b) Whether on the facts and circumstances of the instant case, the learned Tribunal failed to appreciate that during the course of the assessment proceeding for the Assessment Year 2007-08, it was observed that the said assessee company had shown deposit of Rs.86.74 lacs received from the buyer of the office space developed by the assessee company, which claimed to be refundable after 270 years to the buyer and on this ground the deposit was not shown to be the part consideration of the proceeds ?”
We find that the Tribunal while upholding the order passed by the CIT (Appeal) had followed the judgments of the Bombay High Court in CIT –vs- Jet Airways India Ltd. 331 ITR 236 and Delhi High Court in Ranbaxy Laboratories Ltd. –vs- CIT 336 ITR 136.
It appears from the impugned order of the Tribunal that pursuant to the notice for reassessment, the case was reopened on the following reasons:
“ During the course of the assessment proceedings in the Asst. Year 2007-08, it was noticed that the assessee company was showing deposit of Rs.86.74 lacs received from the buyer of the office space developed by the assessee company. The said deposit was being claimed as refundable after 270 years to the buyer. On this ground, the said deposit was not shown as part of the sale consideration.
As this was a ploy adopted by the assessee to suppress the sale proceeds, the said deposit was treated as part of sale consideration while finalising the assessment order for the Asst. Year 2007-08.
During the course of the said assessment proceedings, it was noticed that the assessee company has shown the said deposits in Asst. year 2006-07 also, which was not considered as part of the sale proceeds.”
It is noteworthy that similar issue was raised in the assessment year 2007-08 which was decided by the Tribunal in favour of the assessee. The Revenue accepted the order of the Tribunal by not preferring appeal under section 260A of the Income Tax Act, 1961 and thus the reassessment proceeding was dropped. However, from the order of the Tribunal, it appears that reassessment was pursued by the Assessing Officer on the other issues for which reasons were not recorded. Upon assessee’s appeal, the CIT (Appeal) accepted the contention that the Assessing Officer was not competent to continue with the proceeding under section 147 of the Income Tax Act, 1961 on some other issues which were not mentioned in the reasons recorded under section 148(2) of the Act. In appeal preferred by the Revenue, the Tribunal following the judgments in Ranbaxy Laboratories Ltd. (supra) –vs- CIT and in CIT –vs- Jet Airways India Ltd. (supra) held as under :
“We further find that similar view was taken by the Hon’ble Bombay High Court in the case of CIT –vs- Jet Airways India Ltd. (supra) and the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories India Ltd (supra). The ratio laid down in these decisions is that reassessment must be in the first place, be in respect of income escaped assessment for which the reasons were recorded and only thereafter in respect of some other items of escaped income. If, however, the income, escapement of which was the foundation for recording of reasons to believe, is not assessed or reassessed inthe order under section 147, then it is not mere open to the AO to independently assess any other income, which comes to his notice subsequently.”
In our view, since the reassessment proceedings could not be carried on the original grounds, the Tribunal was justified in dismissing the appeal as it was not open for the Assessing Officer to expand the scope of reassessment by including some other issues. Therefore, no substantial question of law arises. Hence, the application and the appeal are dismissed.
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