Ratnagiri Gas And Power Private Limited Vs ACIT (Delhi High Court)
Conclusion: Reassessment proceedings initiated under section 148 for Assessment Year 2013-14 was not valid as the initiation of reassessment proceedings was barred by limitation and assessee’s income chargeable to tax for AY 2013-14 had not escaped on account of the assessee booking an amount of ₹6.29 crores pertaining to earlier years under the head ‘wages and salaries’.
Held: Assessee-company had filed its return of income for AY 2013-14 declaring a loss of ₹6,41,68,53,076/-. The return was selected for scrutiny, and AO issued a notice under Section 143(2), followed by additional notices, which assessee responded to. The assessment was completed. AO issued a notice under Section 154/155, claiming a mistake in the expense of ₹6,29,00,000/- under ‘wages and salary.’ AO said it was a prior period expense, but assessee explained that the liability had crystalized in FY 2012-13. No further action was taken, and assessee received no further updates. AO issued a notice under Section 148 for re-assessment. Assessee challenged this, arguing the procedure under Section 148A was not followed. The Supreme Court ruled that notices after 31.03.2021 had to follow the amended Section 148A. AO provided the material on 30.05.2022. Assessee responded on 13.06.2022, raising a limitation issue, and on 30.06.2022, gave a full reply. Despite this, AO passed an order on 25.07.2022, deciding to issue a notice under Section 148. On appeal. It was held that assessee had expressly disclosed in its accounts, which were furnished in support of its return that the expenses booked under the head ‘wages and salaries’ included ₹6.29 crores on account of salaries and wages, which pertained to prior financial years. Thus, no proceedings for initiation of reassessment could have been initiated under the provisions relating to reassessment that were in force prior to 01.04.2021 after expiry of four years from the end of the relevant assessment year. Even if reopening of assessment by issuance of notice under Section 148 was permissible under the main enactment of Section 149(1), no such notice could be issued in the present case by virtue of the first proviso to Section 147(1). In view of the above, the question whether, in fact, assessee’s income for the assessment year chargeable to tax for AY 2013-14 had escaped assessment, was not relevant. In either case, the initiation of reassessment proceedings was barred by limitation. However, assessee’s income chargeable to tax for AY 2013-14 had not escaped on account of the assessee booking an amount of ₹6.29 crores pertaining to earlier years under the head ‘wages and salaries’.
