INCOME TAX ACT, 1961

--Reassessment--Notice under section 148Disallowance of proportionate expenses under section 14A--Assessee in his return of income claimed dividend income as exempt which was accepted while processing return under section 143(1). Subsequently vide notice dated 27-3-2008 assessment was reopened under section 147/148 on the ground that in respect of dividend income which had been claimed as exempt, proportionate expenses under section 14A were not allowable. CIT(A) quashed reassessment proceedings as invalid holding that proviso to section 14A bars any such reassessment under section 147 prior to assessment year 2002-03 which was upheld by Tribunal. Held: A bare perusal of proviso would clearly bring out bar created by said proviso for reopening assessment under section 147 for any assessment beginning on or before 1-4-2001. Conditions contained in proviso to section 14A are satisfied in as much as, (a) assessment proceedings were initiated pursuant to notice issued under section 147, (b) notice was based entirely on section 14A, and (c) notice related to assessment year beginning on or before 1-4-2001. Thus it was not permissible for AO to issue such notice. [Paras 5 & 8]

Income Tax Act, 1961, Section 147

Income Tax Act, 1961, Sections 148 & 14A

IN THE DELHI HIGH COURT

A.K. SIKRI & SURESH KAIT JJ.

CIT v. PNB Finance & Industries Ltd.

ITA No. 1759 of 2010