Case Law Details

Case Name : Commissioner of Income-tax-4 Vs Double Dot Finance Ltd. (Bombay High Court)
Appeal Number : IT Appeal No. 856 OF 2011,
Date of Judgement/Order : 21/01/2013
Related Assessment Year :
Courts : All High Courts (3788) Bombay High Court (681)

HIGH COURT OF BOMBAY

Commissioner of Income-tax-4

versus

Double Dot Finance Ltd.

IT APPEAL NO. 856 OF 2011,
CROSS OBJECTION NO. 12 OF 2010

JANUARY 21, 2013

ORDER

1. In this appeal by the revenue for the assessment year 1999-2000, the following question of law has been raised for our consideration.

Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in quashing the reassessment order made by the Assessing Officer by holding that the initiation of reassessment proceedings within a period of four years was bad in law?

2. Brief Facts:

(a) The respondent-assessee is engaged in the business of manufacture of food products. For the assessment year 1999-2000, the respondent-assessee had filed return of income claiming a net loss of Rs. 18.57 lacs. This return of income was processed on 14.11.2000 under Section 143(1) of the Income Tax Act, 1961 (the Act) determining a refund of Rs. 5.82 lacs to the respondent-assessee.

(b) On 29.03.2004, the Assessing Officer issued a notice under Section 148 to the Respondent seeking to reopen the assessment for the assessment year 1999-2000. This was on the ground that the capital subsidy of Rs. 40 lacs was outstanding in respect of the business and if this is taken into account the income is likely to increase by the same while computing the gains on account of slump sale.

(c) Consequent to the above reopening of assessment, the Assessing Officer by an order dated 27.03.2006 under Section 143(3) readwith Section 147 of the Act determined the income of the respondent-assessee at Rs. 31.26 lacs. However, while passing the above order on reassessment the ground on which the assessment was reopened namely that the subsidy of Rs. 40 lacs claimed by the assessee had not been adjusted resulting in income escaping adjustment had been dropped i.e. not confirmed. However, the reassessment order dated 27.03.2006, added certain other income to the respondent-assessee’s declared loss for the assessment year 1999-2000 and determined an income of Rs. 31.26 crores.

(d) In first appeal, the Commissioner of Income Tax (Appeals) (the CIT(A)) by his order dated 10.08.2006 partly allowed the respondent’s appeal. However, the reopening of the assessment for the assessment year 1999-2000 by the Assessing Officer was upheld.

(e) On second appeal, the Tribunal by its order dated 28.10.2009 set aside the reassessment on the ground that the basis for which the assessment was reopened namely receipt of subsidy of Rs. 40 lacs not been adjusted, was dropped during the reassessment proceeding as no addition on that account was made. The Tribunal following the decision of the Rajasthan High Court in the matter of CIT v. Shreeram Singh [2008] 306 ITR 343 held that where no addition is made on account of the reason recorded for reopening the assessment, then jurisdiction of the Assessing Officer to reopen an assessment comes to an end.

3. We note that the aforesaid view of the Rejasthan High Court in the matter of Shriram Singh (supra) followed by the Tribunal in the impugned order is also a view taken by this court in the matter of CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236, wherein it has been held that unless the Assessing Officer assesses the income with reference to which he had formed a reason to believe within the meaning of Section 147 of the Act, it would not be open to him reassess or assess any other income chargeable to tax which has escaped assessment and comes to his notice in reassessment proceedings. In this case, admittedly the ground on which reassessment notice under Section 148 of the Act was issued was dropped while passing the reassessment order dated 27.03.2006 under Section 143(3) read with Section 147 of the Act. Thus, in view of the decision of this court in the matter of Jet Airways (I.) Ltd. (supra), no occasion to entertain the proposed question of law arises.

4. Accordingly, the appeal is dismissed with no order as to costs.

5. In view of the above order passed by us on the appeal by the revenue, the cross objection filed by the cross objector (original respondent) against the impugned order is sought to be withdrawn.

6. Thus, the cross objection is dismissed as withdrawn.

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