2020 (11) TMI 96 - HC - Income Tax

High Court rules reopening of assessment under Section 148 of Income Tax Act without jurisdiction. Assessing Officer's inquiry limited.

M/s. T. Stanes and Company Lt. Versus The Deputy Commissioner of Income Tax, Corporate Circle I (2), Coimbatore

The High Court held that the reopening of assessment under Section 148 of the Income Tax Act for assessment years 2010-11 and 2011-12 was without ... Reopening of assessment u/s 147 - as alleged assessment was wholly without jurisdiction - HELD THAT:- Since the Writ Court had come to the conclusion that reopening of assessment was without jurisdiction. Therefore, to make any further observation or issuing any further direction after holding so cannot be sustained in the eye of law. Having held that the reassessment proceedings were without jurisdiction, no further direction could have been issued by the learned Single Judge and more particularly the directions in paragraphs 17 to 20 of the impugned common order. For the above reasons, we are of the considered view that the appellant should succeed in these appeals. Issues:Challenge to notices issued under Section 148 of the Income Tax Act and consequential orders for assessment years 2010-11 and 2011-12.Analysis:The appellant challenged the reopening of assessment, claiming it was a clear case of change of opinion as the issue was discussed in the previous scrutiny assessment. The appellant argued that the decision of the Kerala High Court cited by the respondent was not applicable to the case. The appellant cited various decisions, including those of the Supreme Court, to support their contention that the activity in question should be considered as manufacturing or processing, making them eligible for deduction under Section 80I of the Act.The High Court noted that the issue was indeed discussed during the scrutiny assessment, and the reopening of assessment was held to be without jurisdiction. The Court referenced the Delhi High Court's decision, emphasizing that the Assessing Officer cannot make a roving inquiry beyond the reasons for initiating proceedings under Section 147 of the Act. The Court also considered the Supreme Court's decision in a related matter.The High Court concluded that the reassessment proceedings were without jurisdiction, and any further directions issued by the Single Judge were not sustainable. The Court allowed the writ appeals, confirming the findings that the reassessment proceedings were without jurisdiction and setting aside additional directions in the impugned order. The judgment was in favor of the appellant, and no costs were awarded.