INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Usurpation of jurisdiction on non-existing jurisdictional fact -

AO received information from investigation wing that assessee was one of beneficiary of certain accommodation entries provider and had taken accommodation entry for loss of Rs. 2 lakhs. Therefore, AO formed a reason to believe that income to the extent of Rs. 2 lakhs had escaped assessment and accordingly, AO issued notice under section 148. However, in the reassessment order AO had not made any addition/disallowance on this issue but proceeded to re-assess the assessee on other incomes like addition of STCG and disallowance under section 14A. Held: Jurisdictional fact which empowered AO to ensure jurisdiction to reopen assessment by issuing notice under section 148 read with section 147 deciphered from reasons recorded was accommodation entry of loss of Rs. 2 lakhs so, when that income which was the foundation on which AO based his belief of escapement of income was absent/disappeared then AO's very usurpation of jurisdiction was on non-existing jurisdictional fact which rendered his usurpation of jurisdiction to reopen assessment legally untenable and so null and void in the eyes of law and therefore, addition/disallowance made on other issue was deleted.

REFERRED : CIT v. Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297 (SC) : 1992 TaxPub(DT) 1434 (SC), V. Janardhan Reddy & Ors. v. CIT 1970 TaxPub(DT) 155 (SC), CIT v. Jet Airways (I) Ltd. (2010) 195 Taxman 117 (Bom) : 2011 TaxPub(DT) 218 (Bom-HC), CIT v. Ram Singh (2008) 306 ITR 343 (Raj) : 2008 TaxPub(DT) 2035 (Raj-HC), Travancore Cements Ltd. v. Asstt. CIT & Anr. (2008) 305 ITR 170 (Ker) : 2008 TaxPub(DT) 0308 (Ker-HC), Vipin Khanna v. CIT & Ors. (2002) 255 ITR 220 (P&H) : 2002 TaxPub(DT) 0096 (P&H-HC) and CIT v. Atlas Cycle Industries (1989) 180 ITR 319 (P&H) : 1989 TaxPub(DT) 1149 (P&H-HC).

FAVOUR : In assessee's favour.

A.Y. : 2010-11

SUBSCRIBE FOR FULL CONTENT