PCIT-13 Vs NESCO Ltd. (Bombay High court)
The Bombay High Court dismissed the Revenue’s appeal under Section 260A of the Income Tax Act, 1961 against the order dated 22nd March, 2017 passed by the Mumbai Bench of the Income Tax Appellate Tribunal. The dispute concerned Assessment Year 2008-2009 and arose from reassessment proceedings initiated under Sections 147 and 148 of the Act.
The respondent-company had originally filed its return on 6th October, 2008 declaring total income of Rs.46,33,63,270/-. The assessment was completed under Section 143(3) on 27th December, 2010. Thereafter, a notice under Section 148 dated 28th March, 2013 was issued within four years, proposing reassessment on the basis that a provision relating to compensation had allegedly not been added back to income.
The Assessing Officer subsequently made a disallowance of Rs.6,50,00,000/- towards compensation provided in the books. The CIT(A) held that the reopening was based on a change of opinion because the relevant issue had already been examined during the original scrutiny assessment and there was no fresh tangible material. The CIT(A) also deleted the disallowance on merits. The ITAT affirmed both findings.
Before the High Court, the Revenue questioned the validity of the reopening and contended that income had escaped assessment and that the assessee had failed to disclose material facts fully and truly. It also challenged the allowance of the Rs.6.50 crore compensation claim, contending that the amount represented merely a provision and an unascertained liability.
