PCIT Vs Gillanders Arbuthnot And Co. Ltd (Calcutta High Court)
Calcutta High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax (PCIT) against Gillanders Arbuthnot And Co. Ltd., upholding a decision by the Income Tax Appellate Tribunal (ITAT), Kolkata. The ruling effectively quashes the reopening of an assessment for the assessment year 2009-10, stating that the tax authorities lacked “reason to believe” that income had escaped assessment and that the reassessment was based on a “change of opinion” rather than new, tangible evidence.
The case centered on the validity of a reassessment proceeding initiated against Gillanders Arbuthnot. For the assessment year 2009-10, the company had reported a “Nil” income in its return, which was initially processed under Section 143(1) of the Income Tax Act, 1961. Subsequently, the case underwent scrutiny under Section 143(2), and a detailed assessment was completed under Section 143(3) on December 28, 2012. During this initial scrutiny, the Assessing Officer (AO) had accepted the company’s submissions after reviewing books of account and other requested details.
The dispute arose when the assessment was reopened through a notice issued under Section 148 of the Act. The AO’s justification for reopening was based on a “suspicious transaction report” concerning M/s. S.R. Sales Corporation, from whom Gillanders Arbuthnot had made cotton purchases. Based on this report, the AO concluded that income had escaped assessment. Despite a detailed reply and objections from the assessee, the AO proceeded with the reassessment, completing it on December 29, 2016, and adding Rs. 99,35,000 to the company’s assessed income.
