Invalid Re-assessment: Lack of Justification, Circular, High Court

M/s JC Fashions Versus The ACIT Circle 6, Jaipur

M/s JC Fashions Versus The ACIT Circle 6, Jaipur - TMI Issues:
1. Validity of re-assessment proceedings under section 148.
2. Disallowance of commission payment due to non-deduction of tax at source under section 40(a)(ia).

Issue 1: Validity of re-assessment proceedings under section 148:
The case involved an appeal by the assessee against the order of Income Tax (A)-2 Jaipur regarding the assessment year 2008-09. The Assessing Officer reopened the case due to commission payment made to a non-resident Indian without TDS deduction. The assessee challenged the reopening before the ld. CIT(A) who granted relief, stating no requirement to deduct tax at source on commission under section 195 or chapter XVII-B of the IT Act, 1961. The Tribunal found that the AO failed to demonstrate non-disclosure of material facts by the assessee during the original assessment. The basis for reopening, a circular dated 22/10/2009, was held non-retrospective by the Jurisdictional High Court, leading to the quashing of the assessment order dated 10/3/2015. The Tribunal allowed the assessee's appeal, emphasizing the lack of justification for reopening.

Issue 2: Disallowance of commission payment due to non-deduction of tax at source under section 40(a)(ia):
In the Revenue's appeal for the same assessment year, similar arguments were presented regarding the reopening of the assessment. The Tribunal reiterated the lack of justification for the reopening, referencing the same circular and High Court judgment. Consequently, the assessment order dated 10/3/2015 was quashed, and the grounds raised in the Revenue's appeal were dismissed. The Tribunal allowed the assessee's appeal while dismissing the Revenue's appeal, concluding the proceedings for the assessment year 2008-09.

In summary, the Tribunal found the re-assessment proceedings invalid due to the lack of justification for reopening based on non-retrospective circular and High Court judgment. The Tribunal allowed the assessee's appeal while dismissing the Revenue's appeal, ultimately quashing the assessment order for the assessment year 2008-09.