2018 (4) TMI 341 - HC - Income Tax

High Court upholds lower authorities' decisions on Income Tax Act reassessment; notice deemed unjustified.

The High Court dismissed the appeal, upholding the decisions of the lower authorities regarding the reassessment under Sections 147/148 of the Income Tax ... Reopening of assessment - Disallowance of deduction u/s 54B - Held that:- The ground on which the reassessment was conducted appears to be the Revenue’s audit objections. In this regard, the CIT(A) and the Tribunal, in our opinion, followed the settled law in holding that it amounted to formulation of a fresh opinion based upon the same material because the assessee could not be said to have withheld any material information in the returns. Furthermore, on the other issue, i.e. merits, the Court is of the opinion that concurrent findings having been rendered, this Court refrains from interference with these orders. Issues:1. Validity of reassessment under Sections 147/148 of the Income Tax Act, 1961.2. Justification of addition of amount in dispute by the Assessing Officer.3. Entitlement of the assessee to claim based on deposit of funds in a non-notified bank.4. Compliance with provisions of Section 54B of the Income Tax Act, 1961.Analysis:1. The High Court addressed the issue of the validity of reassessment under Sections 147/148 of the Income Tax Act, 1961. The Court noted that the CIT(A) set aside the reassessment, deeming the notice under Sections 147/148 unjustified as it amounted to a fresh opinion and an impermissible review. The Tribunal upheld this decision. The Court agreed with this view, stating that the reassessment was based on the Revenue's audit objections, which did not constitute withholding of material information by the assessee. The Court refrained from interference with the Tribunal's decision, emphasizing the settled law in this regard.2. The Court examined the justification of the addition of the amount in dispute by the Assessing Officer. The AO added the amount to the assessment on the grounds that the assessee had invested funds in a non-notified bank and failed to file returns with accompanying proof of deposit of unutilized capital gains. The Court found that the deposit of funds in a non-notified bank rendered the assessee ineligible for the claim made in the returns. The Court upheld the decision of the lower authorities in deleting the amount, as the addition was not justified on merits.3. The issue of the assessee's entitlement to claim based on the deposit of funds in a non-notified bank was also considered. The Court determined that the deposit of funds in a non-notified bank was a crucial factor in assessing the validity of the claim made by the assessee. Since the deposit was not disclosed and was made in a non-notified bank, the Court concluded that the assessee was not entitled to the claim. This aspect played a significant role in the decision to dismiss the appeal.4. Finally, the Court evaluated the compliance with the provisions of Section 54B of the Income Tax Act, 1961. The appellant contended that the deletion of the amount was not justified, emphasizing the non-disclosure of the deposit in a notified bank. However, the Court upheld the decisions of the lower authorities, emphasizing the concurrent findings on the matter. The Court refrained from interfering with the orders, indicating that the Tribunal and CIT(A) had correctly applied the law in this regard.In conclusion, the High Court dismissed the appeal, upholding the decisions of the lower authorities regarding the reassessment, addition of amount in dispute, entitlement of the assessee to claim, and compliance with the provisions of the Income Tax Act, 1961.