ITO Vs Uttarakhand Purv Sainik Kalyan Nigam Ltd. (ITAT Dehradun)
Reopening Before Belated Return Window Ends Is Premature: ITAT Dehradun Quashes s.148 Action
Dehradun ITAT, in ITO vs. Uttarakhand Purv Sainik Kalyan Nigam Ltd. (ITA No.92/DDN/2024, AY 2015-16, order dated 23.12.2025), dismissed the Revenue’s appeal and upheld the CIT(A)’s order quashing reassessment proceedings initiated u/s 147/148 as premature and void ab initio.
The assessee, a State Government undertaking incorporated u/s 617 of the Companies Act, had not filed its return within the due date u/s 139(1). While the time limit to file a belated return u/s 139(4) was still available, the AO issued a notice u/s 148 on 29.08.2016, alleging wrongful claim of exemption u/s 10(26BBB) in earlier years. In response, the assessee filed its return on 20.12.2016, claiming exemption and declaring nil income, but the AO completed reassessment by disallowing exemption of ₹5.82 crore.
The CIT(A) quashed the reassessment holding that when the statutory window for filing belated return was open, the AO could not have formed a belief that income had escaped assessment. The correct course was to issue notice u/s 142(1) or scrutinise the return after filing, and not to resort to reopening.
Affirming this view, the Tribunal held that s.147/148 cannot be invoked when assessment proceedings are still possible under s.139(4) read with s.143(2). Reopening cannot be used as an alternative to scrutiny or merely because the return was not filed within time u/s 139(1). Relying heavily on earlier orders in the assessee’s own case for AY 2014-15, as well as decisions in Momentum Technologies Pvt. Ltd., Qatalys Software Technologies Ltd. and KLM Royal Dutch Airlines, the ITAT held that income cannot be said to have “escaped assessment” when the return-filing process is still legally alive.
In the absence of any contrary precedent shown by the Revenue, the ITAT found no infirmity in the CIT(A)’s order, and accordingly dismissed the Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT DEHRADUN
