COMMISSIONER OF TRADE AND TAXES v. TIRATH RAM AHUJA PVT. LTD

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COMMISSIONER OF TRADE AND TAXES v. TIRATH RAM AHUJA PVT. LTD. [2017] INSC 825 (4 October 2017)

BENCH- M B Lokur, V Gupta

FACTS OF THE CASE- The original assessments for the assessment years 1991-92, 1992-93 and 1993-94 were completed on 28th October, 1993, 26th November, 1993 and 18th January, 2004 respectively under Section 143(3) of the Act at an income of Rs. 3,27,170/-, Rs. 7,84,160/- and Rs. 6,21,830/- respectively. Subsequently, the Assessing Officer came to know that ratable value in respect of properties bearing No. B-6 and B-7, Asaf Ali Road, New Delhi owned by the assessed have been determined at Rs. 10,28,900/- by the Municipal Corporation of Delhi against Rs. 3,61,000/- declared by the assessed on the basis of actual rent received. Thus, the Assessing Officer reopened the assessment for these three assessment years by issuing notice under Section 148 of the Act on 31st March, 2000. In response to subsequent notices, the assessed replied that since the property is let, hence his case is covered under Section 23(1)(b) of the Act and, therefore, the annual value should be determined on the basis of the actual rent received. The Assessing Officer was not satisfied as according to him the annual value of the property should be higher of the ratable value (as determined by the MCD) or the actual rent received. For this proposition, he relied on the judgment of Calcutta High Court in the case of CIT v. Satya Co. Ltd. (1994) 75 Taxman 193 (Cal) and completed the assessment by adopting annual value at Rs. 10,28, 900/- as per the ratable value determined by the Municipal Corporation of Delhi. Being aggrieved by the assessment order, the assessed filed appeals before the Commissioner of Income Tax (Appeals) [for short as CIT(A)] which were decided in favor of the assessed vide order dated 25th March, 2003. Against thereby, Revenue had filed appeals (ITA Nos. 3750, 3751 and 3752/Del/2003 relevant for the assessment years 1991-92, 1992-93 and 1993-94 respectively) before the Tribunal and vide the impugned order dated 29th July, 2005, the appeals were rejected by the Tribunal. The Tribunal had quashed the re-assessment proceedings by holding that the same is barred by limitation. It was held that the case is covered by the proviso to Section 147 of the Act and it is not the case where there has been failure on the part of the assessed to disclose truly all facts on records but the Assessing Officer had reopened the assessment after he came to know that the assessed had not disclosed the correct valuation of the property. The assessment was reopened on the basis of the subsequent information received from Municipal Corporation of Delhi, as such the proviso to Section 147 is not applicable.

ISSUE RAISED- Whether the reassessment by the Assessing Officer based on the subsequent information is valid or not?

HELD- In the present case, the Assessing Officer served the notice under Section 148 of the Act later than 4 years. There was no deliberate concealment of the facts by the assessed. The assessment was reopened on the basis of the subsequent information received from Municipal Corporation of Delhi, as such the proviso to Section 147 of the Act is not applicable and the provisions of Section 149 of the act will be applicable. Thus, in the light of the fact that the initiation by issuance of impugned notices was beyond the period of four years and the prerequisite conditions stipulated by Section 147 of the Act were not fulfillled, there was no case made out for upholding the proposed reassessment. Thus, the action of issuance of notice by the Assessing Officer is without jurisdiction and the assessment already completed under Section 143(3) of the Act cannot be reopened after a period of more than four years from the end of relevant assessment years.

CONCLUSION- Accordingly the appeals filed by the Revenue are, hereby, dismissed.

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