Case Law Details
Price Waterhouse & Co. Vs DCIT (ITAT Kolkata)
Conclusion: Since the addition on basis for which AO reopened assessment had already been disclosed by assessee in the return of income filed by him u/s 139(1), AO having not carried out the scrutiny assessment within the prescribed statutory limit, could not be given another innings for no fault of assessee and therefore, the ‘reason to believe’ which was the jurisdictional precondition to reopen the assessment as required by the law had not been met in the reasons recorded and reopening was void-ab-initio.
Held: AO reopened assessment making the disallowance of Rs. 1,06,95,600/-,debited under the head ‘legal expenses’ and an addition of Rs. 31,12,50,000/- reflected in the Balance sheet under the head “capital reserve”. On appeal, CIT(A) upheld the validity of initiation of proceeding under section 147 and also upheld the addition of Rs. 31,12,50,000/- received by assessee as non-refundable grant under section 28(iv). However, he deleted the disallowance (subject to directions to AO to verify TDS) of Rs. 1,06,95,600/-. It was held that the issues/items for which AO had reopened the assessment had already been disclosed by assessee in the return of income filed by him u/s 139(1). AO having not carried out the scrutiny assessment within the prescribed statutory limit, could not be given another innings for no fault of assessee and therefore, the ‘reason to believe’ which was the jurisdictional precondition to reopen the assessment as required by the law had not been met in the reasons recorded in the instant case and therefore the action of AO to reopen the assessment was null in the eyes of law and hence the initiation of reassessment proceedings was quashed for being ab-initio void.
FULL TEXT OF THE ITAT JUDGEMENT
The captioned appeal filed by the assessee, pertaining to Assessment Year 2009-10, is directed against the order passed by ld. Commissioner of Income Tax (Appeals)-6, Kolkata dated 17.07.2018 which in turn arises out of an assessment order passed by Assessing Officer u/s 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) dated 26.02.2015.
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