TaxTMI 
TaxTMI 
2014 (3) TMI 580
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....kh on such insurance. However, such amount of bonus and other additions being contingent receipts, were not offered for tax for the year under consideration. 2.2 The return of the petitioner's income was accepted without scrutiny. On June 11, 1999, the Assessing Officer issued first notice of reopening of assessment under section 148 of the Act to the petitioner, indicating that he has reason to believe that the petitioner's income chargeable to tax for the assessment year 1997-98 had escaped the assessment. He, therefore, proposed to reassess such income requiring the petitioner to deliver the return in the prescribed format before June 30, 1999. 2.3 Being a case prior to the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. Incometax Officer and others, reported in 259 ITR 19, the petitioner was not aware about the reasons recorded by the Assessing Officer for issuing such notice. The Assessing Officer issued a notice under section 142(1) of the Act on March 06, 2002, calling upon the petitioner to supply the following details : "Details of premium paid on Insurance policy taken on Keyman's life of your company & details of guaranteed addition an....
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....etitioner this time around was supplied the reasons recorded by the Assessing Officer for issuing such notice. The reasons read as under : ""Return of income was filed on 27.11.1997 declaring total income Rs.22,91,690/which was processed u/s.14391). The assessee has deducted from the income, an amount of Rs.6,97,500/being guaranteed addition as keyman insurance policy. Any amount received/ accrued as key man insurance policy is taxable income in view of the provisions of section 2(24)(xi), read with section 28(vi) of the I.T. Act. The same is also not exempt u/s 10(10D). By wrongful claim for exclusion of guarantee addition to Keyman insurance policy to the extent of Rs.6,97,500/become chageable to tax to that extent had escaped assessment. In these circumstances, the assessment for A.Y. 1997-98 for which no scrutiny assessment u/s 143(3) was made is required to be reopened u/s 147 of the Act."" 2.7 From the reasons, it can be seen that even in the reasons recorded for issuing the impugned notice, the central and, in fact, the sole question was regarding taxability of additions and bonuses guaranteed under the Keyman's Insurance policy. The petitioner thereupon made a detai....
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....ax, reported in 292 ITR 49, where the Division Bench of Delhi High Court held and observed that once the assessment has been reopened and notice under section 143(2) of the Act has been issued, it would be mandatory for the Assessing Officer to complete the assessment under section 143(3) of the Act. 4. On the other hand, the learned counsel Mrs.Mauna Bhatt for the Revenue opposed the petition contending that : (i) Original assessment was not completed after scrutiny. Reopening such an assessment was, therefore, permissible as held by the Apex Court in the case of Assistant Commissioner of Incometax v. Rajesh Jhaveri Stock Brokers P. Ltd., reported in 291 ITR 500. (ii) The reassessment initiated pursuant to notice dated June 11, 1999, was dropped by the Assessing Officer without completing the assessment. This order of the Assessing Officer dated March 11, 2002, therefore, cannot be equated with the order of assessment under section 143(3) of the Act. The second notice for reassessment was, therefore, permissible. There is no limitation on the Assessing Officer to issue successive notice for reopening an assessment as long as the requirements of section 147 of the Act are satisf....
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....e of reopening occurred when the decision in the case of GKN Driveshafts (India) Ltd. (supra) was not yet delivered, the petitioner could not avail of the reasons recorded by the Assessing Officer for issuance of such notice. However, taxability of the guaranteed return and the bonus were the only issues, as can be seen from the Assessing Officer's notice to the petitioner dated March 06, 2002 under section 142(1) of the Act. 8. After the petitioner made a detailed representation why such amount should not be added to its total income for the assessment years 1996-97 and 1997-98, the Assessing Officer dropped the entire issue. For the assessment year 1997-98, he passed one line order ordering dropping of the proceedings under section 148 of the Act. For the assessment year 1995-96, he passed a formal order of assessment under section 143(3) of the Act, making no addition towards the said sum. 9. It may be that in technical terms the order dated March 11, 2002, dropping the proceedings under section 148 of the Act may not amount to an assessment under section 143(3) of the Act, however, it would not be open for the Assessing Officer, in the present case, to reopen the assessment o....