TaxTMI 
TaxTMI 
2017 (6) TMI 1151
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.... of the Income- tax Act, 1961 (for short 'the Act') in respect of business profit. Subsequently, the reassessment proceedings were initiated and notice under section 148 of the Act dated 13/03/2006 was issued. In response to the notice, the assessee filed another return of income on 25/04/2006 declaring nil total income after claiming deduction of Rs. 6,94,22,784/- under section 10A of the Act in respect of revised business profit. The reassessment was completed on 22/12/2006 under section 147 read with section 143(3) of the Act. The reassessment proceeding were again initiated by way of issue of notice under section 148 of the Act dated 27/03/2009 after recording reasons. In the reasons recorded, the Assessing Officer has mentioned that the assessee treated the interest income from fixed deposits with banks as margin money for getting credit facilities from the bank as business income. The Assessing Officer recorded that total expenditure on bank interest incurred by the assessee during the year under consideration was of Rs. 28,35,257/-, however the assessee debited Rs. 18,95,966/- to the profit and loss account after netting of interest received of Rs. 9,39,771/- from fixed depo....
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....l in nature, it can be raised at any stage of proceeding including on a reference or in appeal before the Hon'ble High Court: "Additional Ground No.1: That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, further completion of assessment under section 148/143(3) of the Act, that too, without satisfying the statutory pre-conditions for initiation of the proceedings and, completion of assessment under the Act. Additional Ground No.2: That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate the fact that assessment in the case of assessee - appellant was already framed under section 148/143(3) of the Act and thus, the proceedings initiated under section 148 of the Act without there being any specific allegation of "failure" to disclose fully and truly all material facts by the assessee " is a mere pretence and should be quashed, as such. Additional Ground No. 3: That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that the reasons recorded were mere reasons to suspect and were just to make fishing and ....
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.... left open was in respect of addition of Rs. 19,421 on merits and that the legal or jurisdictional aspect whether the reassessment proceedings were legally initiated was not kept open. Even on the third question the Tribunal's view was erroneous that even though this point went to the root of the jurisdiction and was a pure question of law, merely because the point was initially raised and not pressed when the matter was taken up before the Appellate Assistant Commissioner, it could be waived and it could not be reagitated. Therefore, in view of the settled legal position our answers on questions Nos. 1 and 2 are in the negative, while our answer on question No. 3 is in the affirmative, that is to say, all the questions are answered against the Revenue and in favour of the assessee." 8. Further, Hon'ble Rajasthan High Court in the case of Deep Chand Kothari Vs. CIT (1988) 171 ITR 381(Raj.) has taken a view that if the officer completed the assessment lacked jurisdiction, such plea can be raised even in second round of appeal. Hon'ble Rajasthan High Court in the case of Deep Chand Kothari (Supra) held as under: "It is not in dispute that the jurisdiction of the Inco....
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....on 147 of the Act after expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment due to reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. It was submitted that in the reasons recorded the Assessing Officer has nowhere mentioned any failure on the part of the assessee in disclosing the material facts. 8. The Ld. counsel of the assessee also submitted that prior to the reopening of the case second time, the Assessing Officer completed first re-assessment on dated 22/12/2006 and all the relevant material on the issue of interest from fixed deposit was on record and, therefore, reopening the case second time amounted to change of opinion by the Assessing Officer and which is not permitted by the law as held by the Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs. Kelvinator of India Ltd reported in 256 ITR 01, which has been further upheld by the Hon'ble Supreme Court in 320 ITR 561. 9. On the other hand, the Ld. Sr. Departmental Representative relying on the judgement of the Bombay High Court in the case of Yuvraj vers....
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....evant material was on record or could have been with due diligence discerned by the Assessing Officer for the purpose of assessing a particular item of income chargeable to tax, it cannot be inferred that the Assessing Officer must necessarily have deliberated over it and taken it out while ascertaining the taxable income or that he had formed any opinion in respect thereof. If looking back it appears to the Assessing Officer (albeit within four years of the end of the relevant assessment year) that a particular item even though reflected on the record was not subjected to assessment and was left out while working out the taxable income and the tax payable thereon, i.e., while making the final assessment order, that would enable him to initiate the proceedings irrespective of the question of non-disclosure of material facts by the assessed." 28. We are, with respect, unable to subscribe to the afore-mentioned view. If the contention of the Revenue is accepted the same, in our opinion, would confer an arbitrary power upon the Assessing Officer. The Assessing Officer who had passed the order of assessment or even his successor officer only on slightest pretext or otherwise would be....