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It is proposed to amend the provisions of section 149 so as to increase the time limit for issue of notice for reopening an assessment to 16 years, where the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.
Section 149 of the 1961 Act, which provides the period limitation, categorically provides that no notice under Section 148 shall be issued after the period prescribed has lapsed. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Assessing Officer to proceed to reassess.
HV Transmissions Ltd. Vs. ITO (ITAT Mumbai) – Section 147 applies both to section 143(1) as well as section 143(3) and, therefore, except to the extent that a reassessment notice issued u/s 148 in a case where the original assessment was made u/s 143(1) cannot be challenged on the ground of a mere change of opinion, still it is open to an assessee to challenge the notice on the ground that there is no reason to believe that income chargeable to tax has escaped assessment.
CIT Vs. Software Consultants (Delhi High Court)- For exercise of power under Section 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. In the present case, the Assessing Officer did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act.
Alpine Electronics Asia Pte Ltd Vs. DGIT (Delhi HC)- Draft order is not the final assessment order and does not result in completion of assessment. Under sub-section (2) to Section 143, the assessee has a right to accept, within 30 days, the draft assessment order or has right to file objections with the Dispute Resolution Panel and the Assessing Officer. Under Section 144C(3), the Assessing Officer shall complete assessment proceedings on the basis of the draft order only if the assessee files his acceptance to the variations or if no objections are received within 30 days.
Doshion Ltd. Vs. ITo (Ahmedabad HC)- Having thus heard learned counsel for the parties and having perused the documents on record, it clearly emerges that the assessment previously framed after scrutiny is sought to be reopened beyond the period of 4 years from the end of relevant assessment year. In the reasons recorded, the Assessing Officer has not suggested that such income escaped assessment for the failure on the part of the assessee to disclose truly and fully all material facts. In fact the sole ground on which such scrutiny assessment is sought to be reopened beyond 4 years is that by virtue of Explanation to Section 80IA added with retrospective effect from 1.4.2000, income derived from the works contract would not qualify for deduction under Section 80IA of the Act.
CIT vs. SPL’s Siddhartha Ltd (Delhi High Court) – The argument of the assessee before the Tribunal was that the approval was not granted by the Joint Commissioner for reopening U/s. 147. Instead, it was taken from the CIT, Delhi-III, New Delhi, who was not competent to approve even when he was a higher Authority inasmuch as Section 151 of the Act specifically mentions Joint Commissioner as the Competent Authority. This contention of the respondent-assessee has been accepted by the Tribunal thereby quashing the assessment proceedings. The contention of the Revenue that it was merely an irregularity committed by the AO and was rectifiable under Section 292B of the Act, has not been found convincing by the Tribunal. Where the Assessing Officer does not himself exercise his jurisdiction under Section 147 but merely acts at the behest of any superior authority, it must be held that assumption of jurisdiction was bad for non-satisfaction of the condition precedent.
Kimplas Trenton Fittings Ltd Vs ACIT (Bombay HC) – In the present case, admittedly, the reopening of the assessment is beyond a period of four years of the end of the relevant Assessment Year. The jurisdictional condition under Section 147 in such a case is that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that Assessment Year. As noted earlier, in the narration of facts, there was a disclosure by the assessee during the course of the assessment proceedings of the fact that (i) During the previous year ending 31 March 2004, a Memorandum of Understanding (MOU) was entered into with a Swiss Company; (ii) Under the MOU, the outstanding balance of the loan was settled at Swiss Francs 480,000 as against the outstanding balance of 800,000 Swiss francs;
Cadila Healthcare Ltd vs. ACIT (Gujarat High Court) -Assessing Officer was of the opinion that no part of the income of the assessee has escaped assessment. In fact, after the audit party brought the relevant aspects to the notice of the AO, she held correspondence with the assessee. Taking into account the assessee’s explanation regarding non-requirement of TDS collection and ultimately accepted the explanation concluding that in view of the Board’s circular, tax was not required to be deducted at source. No income had therefore escaped assessment. Despite such opinion of the Assessing Officer, when ultimately the impugned notice came to be issued the only conclusion we can reach is that the Assessing Officer had acted at the behest of and on the insistence of the audit party.
The Indian Hume Pipe Co Ltd vs. ACIT (Bombay High Court An exemption was claimed under Section 54EC. All the necessary facts on the basis of which the claim to an exemption are founded must be disclosed. As the assessee failed to do so, the Revenue in the present case would be justified in reopening the assessment on the ground that income has escaped assessment. Clause (c) of Explanation 2 to Section 147 provides for cases where income chargeable to tax is deemed to have escaped assessment.Among those cases are cases where an assessment has been made but (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed to a lower rate; or (iii)such income has been made the subject of excessive relief under the Act; or (iv)an excessive loss or depreciation allowance or any other allowance under the Act has been computed. The Assessing Officer in the present case has not exceeded his jurisdiction in reopening the assessment.
