Express Infrastructure Private Limited Vs ITO (Delhi High Court)
Conclusion: Reopening of assessment was initiated before the lapse of four years, and there was no scope for interference with the Income Tax authorities’ reopening decision if escapement income was found. It was open for assessee to urge that the deductions claimed by assessee were perfectly in order and therefore question of adding the amounts back to the taxable income of assessee would not arise.
Held: Assessee filed a regular Return of Income under Section 139 for the Assessment Year 2017-2018, ultimately culminated in a Scrutiny Assessment Order. Assessee submitted that AO considered all the issues threadbare before passing Scrutiny Assessment Order under Section 143(3) and therefore, the question of re-opening the assessment under Section 148 could not be countenanced. Assessee submitted that out of two issues which were flagged vide notice issued under Section 143(2) read with Section 147, the first issue related to expenses incurred by assessee towards Model Flat and New Sales Office Express Exclusive claimed as revenue expenses and the second issue related to capitalization of amounts paid towards foreclosure of loans , the said issue was also subject matter of the Scrutiny Assessment order. Assessee had incidentally filed an appeal before the Appellate Commissioner against the Assessment order dated 27.11.2019 which had now been transferred to the National Faceless Assessment Appeal Centre and was yet to be adjudicated. Assessee contended that reopening of the assessment and overruling of assessee’s objection to reopening of the objection vide Impugned Order was liable to be interfered and was therefore liable to be set aside. Revenue argued that under Section 147 before the amendment effective from 01.04.2021, if income chargeable to tax had been under-assessed, it could be deemed as a case where income had escaped assessment. Even after four years, reopening was permissible under certain circumstances. Therefore, the reopening of the assessment was justified. It was held that notice issued under Section 148 was before the expiry of 4 years. If the income had escaped assessment, invocation of Section 148 of the Income Tax Act, 1961 could not be interfered. Further, there was no final determination of the tax liability in the impugned order seeking to reopen the assessment that was completed vide Assessment Order. It was open for assessee to urge that the deductions claimed by assessee were perfectly in order and therefore question of adding the amounts back to the taxable income of assessee would not arise. Therefore, this writ petition was liable to be dismissed.
