Nagarajan Jaya Vs ITO (ITAT Chennai)
Reassessment Beyond Four Years Held Invalid – ITAT Chennai (AY 2011–12)
The Chennai Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal by holding that the reassessment initiated under section 147 after four years from the end of the relevant assessment year was invalid in law. The original assessment under section 143(3) had already examined the real-estate transactions and accepted the assessee’s disclosure of commission income at 3% on total turnover of ₹1.84 crore.
The Tribunal held that once the entire reassessment order was set aside for de novo consideration by the Commissioner under section 264, the Assessing Officer was duty-bound to reconsider both jurisdictional validity and merits. Passing a mere “giving effect” order without adjudicating the jurisdictional challenge was improper.
Importantly, the Tribunal clarified that jurisdictional issues can be raised even in appeal against a giving-effect order, as such orders are a continuation of the original reassessment proceedings. Since the reopening was based on the same material already examined earlier, and there was no allegation of failure to disclose fully and truly all material facts, the bar under the first proviso to section 147 squarely applied.
Reliance placed by the Revenue on Explanation 2(c) to section 147 was rejected, holding that an Explanation cannot override statutory limitation. Consequently, the reassessment was quashed as time-barred, and all additions became academic. The assessee’s appeal was allowed in full
FULL TEXT OF THE ORDER OF ITAT CHENNAI
