Big B Wins - 'It is a settled position of law that review under garb of reassessment is not permissible': HC
THE Respondent in this interesting case is Amitabh Bachchan.
On 13 October 2002, he had filed his return of income declaring his income at Rs.14.99 crores for the Assessment Year 2002-03. Thereafter, on 31st March, 2002, the assessee filed a revised return of income declaring his total income for the assessment year 2002-03 wherein he claimed expenses at 30% adhoc amounting to Rs.6.31 crores and determining his income at Rs. 8.11 crores. However, before the assessment for the Assessment Year 2002-03 could be completed, the assessee by a letter dated 13th March 2004 withdrew the revised return along with his claim of deduction of 30% adhoc expenses from his total income. On 29th March 2005, the Assessing Officer completed the assessment for the Assessment Year 2002-03 determining the respondent's income at Rs.56.41 crores.
On 5th April 2006, a notice under Section 148 of the Act was issued to the respondent assessee seeking to reopen the assessment proceedings for the Assessment Year 2002-03. Consequent to the above notice by an order dated 31st December 2007 the respondent was assessed to a total income of Rs.20.05 crores. This was arrived at after adding an amount of Rs.6.31 crores as unexplained expenses under Section 69C of the said Act for which notice under Section 148 of the said Act had been issued.
By an order dated 4th March, 2009 the Commissioner of Income Tax (Appeal) set aside the reassessment order dated 31st December 2007 by holding that the Assessing officer has wrongly assumed jurisdiction under Section 147 of the said Act. The material based on which the assessment was sought to be reopened was always available during the time of the original proceeding leading to the assessment order dated 29th March, 2005.
Being aggrieved, the appellant revenue filed an appeal to the Tribunal.
Tribunal held that the reasons recorded for initiating reassessment proceeding under Section 147 of the said Act clearly indicates that there was no new material which had come to the notice of the Assessing Officer so as to lead to a reasonable belief that income assessable to tax has escaped assessment. The adhoc expenses of 30% from the receipts was the subject matter of consideration of the Assessing officer when he passed the assessment order on 29th March,2005 under Section 143(3) of the said Act. Consequently, there was no fresh tangible material for the Assessing Officer to initiate reassessment proceeding under Section 147 of the said Act.
Aggrieved Revenue took the matter in appeal to the High Court.
The High Court observed,
Both the Commissioner of Income Tax (Appeal) and the Tribunal have correctly come to the conclusion that there was no fresh tangible material before the Assessing Officer to reach a reasonable belief that the income liable to tax has escaped assessment. The order passed originally on 29th March 2005 under Section 143(3) of the said Act was passed after the respondent had made adhoc claim for expenditure at 30% of the professional receipts in the revised return of income which was later withdrawn. In fact the reasons for reopening the assessment for the year 2002-03 itself records that the claim of 30% adhoc expenses was withdrawn when the respondent assessee was asked to substantiate the claim. Therefore, the same material was a subject matter of consideration during the proceedings for assessment leading to order dated 29th March, 2005. In the circumstances, there could be no basis for the Assessing Officers to form a belief that income has escaped assessment. It is a settled position of law that review under the garb of reassessment is not permissible.
The High Court found no substantial question of Law and so dismissed the Revenue Appeal.
The End - Like in all his movies, ultimately good survives over evil and the hero Amitabh always wins!
Click Here for the full text of the High Court Order.