AO cannot Initiate Reassessment Proceedings during Pending Rectification Proceedings: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) held that the Assessing Officer ( AO ) cannot initiate reassessment proceedings under section 148 of Income Tax Act,1961 while rectification proceedings were still pending.

Vimoni India Pvt. Ltd.,appellant-assessee, appealed against the order dated 03.11.2014  passed by Commissioner of Income Tax(Appeals)[CIT(A)] for the assessment year 2005-06. The assessee’s counsel submitted that the AO issued a notice under section 154, followed by a notice under section 148 within seven days. It was stated that the section 154 proceedings were initiated but not disposed of.

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The counsel pointed out that the reasons in both notices were identical and referred to an approval form submitted by the AO to the Assistant Commissioner of Income Tax(ACIT), which also contained the same reasoning. In support, the counsel cited the Supreme Court’s decision in SM Overseas Pvt. Ltd. vs. CIT (Civil Appeal Nos. 3612-3613 of 2012, dated December 7, 2022).

The two member bench comprising Sudhir Kumar(Judicial Member) and S.Rifaur Rahman(Accountant Member) reviewed the submissions and records, including the AO’s approval form dated March 27, 2012. It noted that the AO had issued a notice under section 154 for rectification and later initiated proceedings under section 148 with identical reasoning.

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Referring to the Supreme Court’s ruling in SM Overseas Pvt. Ltd., the Tribunal observed that reassessment proceedings under section 148 could not be initiated while section 154 proceedings were still pending. Since the AO had not disposed of the section 154 proceedings, the Tribunal held that the initiation of section 148 proceedings was beyond jurisdiction. Accordingly, it quashed the section 148 proceedings as bad in law.

Read More:ITAT Sets Aside CIT(A) Order, Restores Case for Fresh Adjudication due to Erroneous Declaration of Assessment Order as Void Ab-Initio

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In short,the appeal filed by the assessee was partly allowed.

To Read the full text of the Order CLICK HERE

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