2014 (7) TMI 14 - HC - Income Tax

High Court upholds Tribunal's order setting aside Commissioner's decision under Income Tax Act

COMMISSIONER OF INCOME TAX-6 Versus M/s CENTURY TEXTILES & IND LTD

COMMISSIONER OF INCOME TAX-6 Versus M/s CENTURY TEXTILES & IND LTD - TMI Issues:Challenge to the order of the Income Tax Appellate Tribunal regarding the assessment year 2001-2002 under the Income Tax Act.Analysis:The High Court heard the revenue's appeal challenging the Tribunal's order setting aside the Commissioner of Income Tax's order under section 263 of the Income Tax Act for the assessment year 2001-2002. The appellant's counsel argued that the Tribunal overlooked Explanation(3) inserted in section 147 of the Income Tax Act, allowing the Assessing Officer to assess or reassess income on any issue that escaped assessment. The counsel contended that the reasons for reopening were included in the notice issued on 9th June 2005, and thus, the Tribunal's view raised a substantial question of law. However, the Court disagreed, stating that the original assessment was completed in 2004, and the case was reopened in 2006 due to under-assessment of book profit. The Commissioner of Income Tax found errors in the reassessment, leading to the conclusion that the original order was prejudicial to the revenue's interest. The Tribunal upheld the assessee's appeal based on the limitation period starting from the original assessment date. The Court held that the Tribunal's finding on the limitation point was not vitiated by any legal error and did not raise a substantial question of law. The Court dismissed the appeal, noting the peculiar facts of the case and the absence of relevance of Explanation(3) in this scenario.