Case Law Details
Jibu John Vs ITO (Kerala High Court)
In a recent judgment, the Kerala High Court addressed a crucial aspect of income tax law relating to the reassessment of income under Section 147 read with Section 144C(13) of the Income Tax Act, 1961. The case, Jibu John Vs ITO, revolved around the reassessment procedure for the assessment year 2015-16, highlighting the principles governing the reopening of assessments based on estimations of income that have escaped assessment.
Background of the Case: The petitioner, a Non-Resident Indian (NRI) residing in the United Arab Emirates, did not file a return of income for the assessment year 2015-16. Upon receiving information through the Insight portal indicating transactions amounting to Rs. 60,08,932/- for the financial year 2014-15, relevant to the assessment year 2015-16, the Income Tax Officer (ITO) initiated proceedings to reassess the petitioner’s income. The proceedings were based on the premise that the petitioner’s income for the said year had escaped assessment.
Contentions and Court’s Decision: The petitioner challenged the reassessment order (Exhibit P-12), arguing that the actual income that had escaped assessment was only Rs. 20,29,690/-, falling below the threshold of Rs. 50,00,000/- as stipulated under Section 149 of the Act for reopening the assessment. The petitioner contended that this discrepancy invalidated the jurisdictional ITO’s authority to reopen the assessment.
The Kerala High Court dismissed the petitioner’s arguments, clarifying that the assessment’s reopening is not contingent upon the final assessed income but rather on the assessing authority’s estimation of the income that has escaped assessment. The Court noted that since the estimated income exceeding Rs. 50,00,000/- justified the reassessment, the authority’s decision to reopen the assessment was valid.
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