Relief to Owner of Taj Hotel Group: ITAT Sets Aside Income Tax Reassessment action Initiated [Read Order]

In a ruling in favour of the owner of Taj Hotel Group, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a reassessment action initiated under the Income Tax Act, 1961. 

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According to the assessee, Indian Hotels Company Limited, a scrutiny assessment was carried out for the assessment year in question in accordance with 143(3) of the Income-tax Act, 1961. that four years following the conclusion of the relevant evaluation year, the assessment was revisited. As a result, the Assessee contended that in order for a reopening to be legitimate, the Assessing Officer had to unequivocally assert that the Assessee had not completely and honestly disclosed all relevant information required for its evaluation. But in the notice for reopening, the Assessing Officer neglected to do so.

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According to the Assessee, the reopening is illegal. Additionally, it noted that the AO had formed the opinion that income had evaded assessment by relying on Clause (b) of Explanation 2 to Section 147 of the Act. The aforementioned clause, however, applies in situations when no scrutiny assessment has been completed, which was not the case in this instance.

According to the Department, the Enforcement Directorate's report served as the basis for starting the evaluation process.

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The two member bench of Om Prakash Kant, Accountant Member and Rahul Chaudhary, Judicial Member viewed that the AO had to unequivocally allege that the Assessee had failed to fully and truthfully disclose all relevant information required to frame the assessment. Since the AO failed to do so, the ITAT revoked the reopening procedures.

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Since the initial assessment had already been finished in accordance with Section 143(3) of the Act in the Assessee's case, the ITAT  annulled the reopening on the grounds that Clause (b) of Explanation 2 to Section 147 of the Act had been incorrectly invoked.

To Read the full text of the Order CLICK HERE

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