Court allows appeal on Income Tax Act assessments for 2012-13, upholds Rule 6DD(k) exemption. Notice for reassessment quashed.

The Court partially allowed the appeal in a case involving assessments under Sections 153C and 147 of the Income Tax Act for the assessment year 2012-13. The Appellate Authority upheld the Rule 6DD(k) exemption for payment through self cheques, reducing the reassessed income. Additionally, the Court quashed the notice for reopening the assessment under Section 147, citing ongoing appeal proceedings and lack of exceptional circumstances for the Department's actions.

---

---

Issues:
1. Assessment under Section 153C of Income Tax Act for the assessment year 2012-13.
2. Disallowance under Section 40A(3) and Rule 6DD(k) for payment through self cheques.
3. Reopening of assessment under Section 147 of Income Tax Act, 1961.

Assessment under Section 153C of Income Tax Act for the assessment year 2012-13:
The petitioner, a copra trader, filed his return for the assessment year 2012-13, admitting total income of Rs. 6,25,210. Subsequently, the assessing officer conducted a scrutiny assessment under Section 143(3) and determined the total income as Rs. 21,25,210. The petitioner did not challenge this order. Later, assessment proceedings were initiated under Section 153C due to transactions with M/s.V.V.D & Sons Private Limited. The assessing officer reassessed the income by adding Rs. 5,45,52,015. The Appellate Authority partly allowed the appeal, citing Rule 6DD(k) exemption for payment through self cheques, which was upheld based on a similar judgment by the Madras High Court.

Disallowance under Section 40A(3) and Rule 6DD(k) for payment through self cheques:
The Appellate Authority allowed the appeal against disallowance under Section 40A(3) based on Rule 6DD(k) exemption for payments made through self cheques to agents who further disbursed to farmers. The Tribunal is yet to decide on the Department's appeal against this decision. The petitioner's counsel argued that the payments fall under Rule 6DD(k) and were supported by evidence, including a certificate from an agent and bank transaction details. The petitioner contended that the impugned proceedings lacked new material and were initiated after a lapse of four years from the assessment year, thus lacking jurisdiction.

Reopening of assessment under Section 147 of Income Tax Act, 1961:
The Department issued a notice for reopening the assessment for the year 2012-13 under Section 147. The petitioner challenged this notice citing the third proviso to Section 147, which prohibits initiating proceedings when matters are subject to appeal. The Court quashed the notice, emphasizing that ongoing appeal proceedings prevent the Department from reopening assessments under Section 147. The Court also noted that the impugned proceedings lacked jurisdiction and were initiated after a lapse of four years without exceptional circumstances, leading to the quashing of the notice.

---

---