2021 (12) TMI 1256

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....l income of Rs. Nil. The assessee has filed the income and expenditure account, balance sheet and audit report in Form 10B along with the return of income. The scrutiny assessment was completed in the hands of the assessee trust u/s.143(3) of the Act on 13/12/2020 assessing total income at Rs. Nil. Later the assessment for the A.Y.2008-09 was sought to be reopened by issuance of notice u/s.148 of the Act after due recording of reasons for reopening. In the said reasons, it was observed that assessee had claimed accumulation u/s.11(2) of the Act at Rs. 80,00,000/- for which the assessee had not submitted Form No.10 and hence, the said accumulation should be disallowed. Further, it was also observed that assessee had claimed a sum of Rs. 2,34,22,327/- being amount transferred to development fund as an application of fund. In the opinion of the ld. AO, the said does not represent application of fund for charitable purposes and hence, to be disallowed. For these two reasons, the assessment for A.Y.2008-09 was reopened by the ld. AO. However, while framing the re-assessment u/s.143(3) r.w.s. 147 of the Act dated 22/02/2016, the addition of Rs. 80,00,000/- towards accrued interest on RBI....

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....ceedings under this Section", as the consultancy receipts was very much disclosed by the assessee in the income and expenditure account which was filed along with the original return of income itself. If at all there is any error in the assessment order framed by the ld. AO, it can only be in the original scrutiny assessment order u/s.143(3) of the Act dated 13/12/2010 and not in the re-assessment order framed u/s.143(3) r.w.s. 147 of the Act dated 22/02/2016. Hence, the show-cause notice issued by the ld. CIT(Exemptions) dated 28/02/2017 is squarely beyond the period of two years from the end of the financial year in which the 143(3) assessment was completed as per Section 263(2) of the Act. Hence, it could be safely concluded that the re-assessment framed by the ld. CIT(Exemptions) on 21/03/2018 is squarely barred by limitation. We find that the very same issue is no longer res integra in view of the decision of the Hon‟ble Supreme Court in the case of CIT vs. Alagendran Finance Ltd., reported in 293 ITR 1 (SC). The relevant portion of the said order is reproduced hereunder:- "7. A bare perusal of the order passed by the Commissioner of Income-tax would clearly dem....

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.... prescribed under the Act. Thus, under section 147, the Assessing Officer has been vested with the power to 'assess or reassess' the escaped income of an assessee. The use of the expression 'assess or reassess such income or recompute the loss or depreciation allowance' in section 147 after the conditions for reassessment are satisfied, is only relatable to the preceding expression in clauses (a) and (b), viz., 'escaped assessment'. The term 'escaped assessment' includes both non-assessment as well as 'under assessment'. Income is said to have 'escaped assessment' within the meaning of this section when it has not been charged in the hands of an assessee in the relevant year of assessment. The expression 'assess' refers to a situation where the assessment of the assessee for a particular year is, for the first time, made by resorting to the provisions of section 147 because the assessment had not been made in the regular manner under the Act. The expression 'reassess' refers to a situation where an assessment has already been made but the Income-tax Officer has, on the basis of information in his possession, reason to ....

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....ee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment. The assessee cannot claim recomputation of the income or redoing of an assessment and be allowed a claim which he either failed to make or which was otherwise rejected at the time of original assessment which has since acquired finality. Of course, in the reassessment proceedings, it is open to an assessee to show that the income alleged to have escaped assessment has in truth and in fact not escaped assessment but that the same had been shown under some inappropriate head in the original return, but to read the judgment in Jaganmohan Rao's case, as [if] laying down that reassessment wipes out the original assessment and that reassessment is not only confined to 'escaped assessment' or 'under assessment' but to the entire assessment for the year and starts the assessment proceeding de novo giving the right to an assessee to reagitate matters which he had lost during the original assessment proceeding, which had acquired finality, is not only erroneous but also against the phraseology of section 147 of the Act and the object of reassess....

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....rein cannot be said to have any application whatsoever. It is not a case where the subject-matter of reassessment and subject-matter of assessment were the same. They were not. 13. It may be of some interest to notice that a similar contention raised at the instance of an assessee was rejected by a 3-Judge Bench of this Court in CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50. This Court took note of the amendment made in section 263 of the Act by the Finance Act, 1989 with retrospective effect from 1-6-1988, inserting Explanation (c) to sub-section (1) of section 263 of the Act stating: "The consequence of the said amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred." (p.....