Case Law Details
PCIT Vs Escorts Ltd (Delhi High Court)
In PCIT vs Escorts Ltd, the Delhi High Court dismissed the Department’s appeal against the order of the Income Tax Appellate Tribunal concerning AY 2001-02. The appeal challenged the Tribunal’s affirmation of the CIT(A)’s decision quashing reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961. The Department had argued that the CIT(A) erred in declaring the reassessment order passed under Sections 148/143(3) as null and void. The respondent submitted that the reassessment proceedings were initiated after the CIT(A) had already annulled the original assessment order dated 31.01.2006 and that the Assessing Officer had attempted to make the same additions again for the same assessment year. The CIT(A), through order dated 30.01.2015, held the reassessment proceedings to be illegal and arbitrary and consequently quashed the reassessment order. The Tribunal affirmed this view. The High Court held that once the Assessing Officer had already applied his mind and made additions that were later set aside by the CIT(A), Section 148 could not be invoked to reintroduce the same additions. The Court also noted that the Department’s connected appeal on merits had already been rejected on the same date. Accordingly, the present appeal arising from the reassessment order was also rejected.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present appeal has been preferred by the appellant against the order dated 27.11.2018 of the Income Tax Appellate Tribunal, Delhi Bench ‘B’, New Delhi (ITAT) (hereinafter referred to as ‘the Tribunal’) in Appeal No. 3652/Del/2015 for the Assessment Years (AY) 2001-02, which was filed by Assistant Commissioner Income Tax against the order of the Commissioner of Income Tax (Appeals)-3, New Delhi (hereinafter referred to as ‘CIT(A)’) dated 30.03.2015.
2. The questions, which were raised by the Department before the Tribunal are reproduced herein Fra :
“ 1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in quashing the order u/s 148/143(3) of the I.T. Act, dated 29.12.2026 and holding the same as null and void.
2. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.”
3. Learned counsel for the respondent at the outset submitted that the relevant reassessment order dated 29.12.2006 under Section 148 of the Act of 1961 was passed by the Assessing Officer (AO) for the same Assessment Year (AY) i.e. 2001-02, qua which the appeal on merit being ITA No. 1427/2006 has been rejected by this Court vide order of even date (i.e. 27.04.2026).
4. He added that the AO had initiated reassessment proceedings in relation to very same AY 2001-02 after the assessee’s appeal was allowed by the CIT(A) and made the very same addition to the assessee’s income so as to overcome the setting aside of the initial assessment order which was annulled by order dated 31.01.2006 passed by the CIT(A), Delhi.
5. Learned counsel submitted that the CIT(A) vide his order dated 30.01.2015, declared the initiation of the reassessment proceedings under Section 148 of the Income Tax Act, 1961 to be illegal and arbitrary and has consequently quashed the assessment order and said order of CIT(A) has been affirmed by the Tribunal.
6. Having heard learned counsel for the parties, we are of the view that the CIT(A) was perfectly justified in declaring the proceedings to be illegal inasmuch as the AO having applied his mind and made the addition, which had been otherwise set aside by the CIT(A), could not have invoked Section 148 of the Act of 1961. Said decision has been rightly affirmed by the Tribunal by the order impugned.
7. Since we have rejected Department’s appeal i.e. ITA No. 1427/2006 by order of even date, in which the merit of the additions have been examined, the present appeal emanates from order of reassessment is liable to be rejected apart from on the ground of validity of proceedings.
8. The appeal is disposed of accordingly.
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