Dhanterash Tradewing Pvt. Ltd. Vs ITO (ITAT Kolkata)
Once 263 is dropped, 147 Is Dead – Kolkata ITAT Strikes Down Reassessment/Quashes Rs. 7.03 Cr Addition
Reopening after Dropped 263 Proceedings Invalid
Kolkata ITAT allowed the appeal for A.Y. 2011-12 by holding that reopening of assessment on issues already examined in earlier 263 proceedings, which were subsequently dropped by PCIT, was invalid & without jurisdiction.
Assessee filed return declaring income of Rs. 3,851/- which was processed u/s 143(1). Scrutiny assessment was completed u/s 143(3) on 07.05.2013 assessing total income at Rs. 49,750/-, after calling for & verifying details of funds received amounting to Rs. 7.03 crore. Subsequently, PCIT issued notice u/s 263 on 03.02.2015 alleging failure of AO to verify genuineness of investments. Assessee filed detailed reply with all evidences, pursuant to which PCIT dropped the proceedings vide order dated 28.03.2016.
Thereafter, AO reopened assessment by issuing notice u/s 148 on 23.03.2018 based on information from Investigation Wing & framed reassessment u/s 144 r.w.s. 147 on 19.11.2018 adding entire Rs. 7.03 crore. CIT(A) ignored Assessee’s submissions & evidences and dismissed the appeal ex parte on ground of non-compliance.
Before Tribunal, it was argued that once PCIT, being higher authority, had already examined the issue in 263 proceedings & dropped the same after due consideration of evidences, reopening on the very same issue was impermissible in law. Tribunal observed that AO had already examined funds in original assessment u/s 143(3), then PCIT also looked into it in 263 proceedings & dropped the revision. Therefore, reopening on same ground was invalid.
