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While Explanation 2 to s. 147 deems income to have escaped assessment if excessive deduction is allowed, the reopening of an assessment u/s 147 has serious ramifications because the AO is empowered to reassess income even in respect of issues not set out in the notice. Therefore, if the power to rectify an order u/s 154(1) is adequate to meet a mistake or error in the order of assessment, the AO must take recourse to that power as opposed to the wider power to reopen the assessment. If the error can be rectified u/s 154, it would be arbitrary for the AO to reopen the entire assessment u/s 147. Further, the error in the order was not attributable to a fault or omission on the part of the assessee and the assessee cannot be penalized for a fault of the AO;
The principal challenge in these proceedings is to the notices issued by the first respondent under section 148 of the Income Tax Act, 1961 proposing to assess the income of the petitioner for assessment years 2005-06 and 2006-07 on the ground that there is reason to believe that income chargeable to tax had escaped assessment, within the meaning of section 147.
In respect of AY 2004- 05, the assessee computed its book profits u/s 115JB by claiming a deduction for provision for doubtful debts and advances and the same was allowed vide order u/s 143 (3). On 18.07.2008 (within 4 years), the AO issued a notice u/s 148 inter alia on the ground that the provision for doubtful debts had to be added back to the book profits.
The admitted position before the Court, on the basis of the material on the record, is that by the notice under Section 148 issued on 30th November 2009, the assessment pertaining to the year 2002 03 was sought to be reopened after the lapse of four years. Section 147 postulates inter alia that if the Assessing Officer has reason to believe
In a recent ruling Supreme Court (SC) [2010-TIOL-06- SC-IT-L13] in the case of Kelvinator of India Ltd. (Taxpayer) held that income cannot be reassessed on a mere change of opinion, as that would imply conferring arbitrary powers on the Tax Authority. It is only when there is a tangible material to believe that income has escaped assessment
In a reprieve to the assessees, the Supreme Court has ruled that the Income-Tax Department cannot re-open the assessment cases arbitrarily but on the basis of some ‘tangible material’. If armed with unrestricted power to re-open the cases against assessees, it will amount to review of the assessment by the assessing authority, said the apex court.
In CIT Vs Kelvinator of India Ltd. 256 ITR 1 the Full Bench of the Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the assessment year. The Court held that when a regular order of assessment is passed in terms of section 143 (3) of the Act, a presumption can
Explore the Supreme Court’s ruling on change of opinion in tax assessments & Section 147 amendments post Direct Tax Laws (Amendment) Act, 1987
Whether, the Tribunal was correct in holding that the Assessing officer had to record his reasons and based on those reasons form his opinion that the income has escaped assessment by relying on two judgments of this Hon’ble Court in 133 JTJ? 199 and 155 ITR 748 before reopening assessments when Section 147
In assessment years 1995-96 and 1996-97, the only identical reason recorded by the Assessing Officer for reopening the assessment, with variation in the amounts involved, is that the interest income under section 244 A has escaped assessment and to reassess the same under section 147 of the Act notice under section 148 of the Act was issued. While completing the assessment under section 143(3) read with section 148 the Assessing Officer applied a higher rate of tax, i.e. @ 55%, applicable to foreign companies on the business income instead of the tax rate applicable to domestic companies, aga
