2016 (9) TMI 64 - HC - Income Tax

Court rules on interpretation of Section 14A of Income Tax Act, limits Assessing Officer's powers in reassessment

CIT, Kol-Iv, Kolkata Versus M/s. Eastern Resin & Allied Products Ltd.

The High Court of Calcutta dismissed the appeals and ruled against the revenue in a case concerning the interpretation of Section 14A of the Income Tax ... Disallowance made under Section 14A in the re-assessment pending - Held that:- Question is squarely answered by the proviso to section 14A which reads as follows:- 'Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001.' - Decided in favour of assessee. Issues:Interpretation of Section 14A of the Income Tax Act, 1961 in the context of reassessment for assessment years 2000-01 and 2001-02.Analysis:The High Court of Calcutta heard two appeals against a common judgment pertaining to assessment years 2000-01 and 2001-02, where the Income Tax Appellate Tribunal had allowed the appeals of the assessee. The revenue, feeling aggrieved, filed an appeal questioning the Tribunal's decision. The primary issue raised was whether a disallowance could be made under Section 14A of the Income Tax Act, 1961, in a case where the assessment was reopened under Section 147 of the Act. This issue was framed by the Court for consideration.The Court referred to the proviso to Section 14A of the Income Tax Act, which explicitly states that the Assessing Officer is not empowered to reassess under Section 147 or enhance the assessment for any year before April 1, 2001. The Court noted that this proviso provides a clear answer to the question raised in the appeals. The revenue's advocate, Mr. Agarwal, did not contest the applicability of the proviso to the case at hand, acknowledging that it resolved the issue raised.Consequently, the Court dismissed the appeals and answered the question in the affirmative, ruling against the revenue. The Court also noted the absence of representation from the assessee and directed the affidavits of service filed by Mr. Agarwal to be kept on record. This judgment serves as a significant interpretation of Section 14A in the context of reassessment proceedings, providing clarity on the limitations imposed on the Assessing Officer in such cases.