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Uttrakhand Poorv Sainik Kalyan Nigam Ltd. Vs ITO (ITAT Dehradun); ITA No. 3129/Del/2018; 23/06/2023; 2014-15

Facts of the case: Assessee had filed its return of income for A.Y. 2014-15 belatedly under section 139(4) of Income-tax Act, 1961 on 06.10.2015. This return was not selected for scrutiny by Assessing Officer. However, Assessing Officer issued a notice under section 148 on 22.01.2015 itself which is prior to the date of filing of return of income by the assessee. Assessee had got time to file the return belatedly in terms of section 139(4) till 31.03.2016.

Observations of Tribunal

Despite the due date for filing the belated return of income under section 139(4) was available to the assessee, the Assessing Officer prematurely reopened the assessment by issuing notice under section 148 much before the end of the assessment year itself. Against the belated return of income filed by the assessee under section 139(4) on 06.10.2015, the Assessing Officer had time to issue notice under section 143(2) till 30.09.2016.

When the return of income is not filed within the due date prescribed under section 139(1), Assessing Officer is entitled as per the statute to issue notice under section 142(1) for calling the return of income from assessee. Without resorting to this statutory provision, the Assessing Officer cannot directly proceed to reopen assessment. In any case, when the due date for filing return of income is available in terms of section 139(4) to the assessee then how there could be any satisfaction on the part of the Assessing Officer to conclude that the income of the assessee had escaped assessment.

Nothing prevented the Assessing Officer to select this return for scrutiny and frame the assessment in accordance with law. When this provision is available with the Assessing Officer then there is no need for him to issue notice under section 148 that too before the end of assessment year itself. In any case, revenue cannot resort to reopening proceedings merely because a particular return is not selected for scrutiny. Reopening of an assessment cannot be resorted to as an alternative for not selecting a case for scrutiny. There should be conscious formation of belief based on tangible information that income of an assessee had escaped assessment.

Decision of Tribunal: Reassessment proceedings were quashed as void ab initio.

Conclusion: The ITAT Dehradun’s ruling in Uttrakhand Poorv Sainik Kalyan Nigam Ltd. vs ITO establishes a critical precedent that Section 142(1) and 148 cannot operate simultaneously. This landmark decision reinforces the principle that reopening assessments should be based on credible evidence, and it cannot be a substitute for the scrutiny selection process. By quashing the reassessment proceedings as void ab initio, the Tribunal upholds the importance of due process and accurate interpretation of tax law.

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May 2024