Reopening of Assessment u/s 147 can't be initiated after Expiry of 4 years on basis of failure of assessee in deducting TDS on Interest Payment: ITAT [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the reopening of the assessment under Section 147 of the Income Tax Act, 1961 cannot be initiated after the expiry of 4 years based on the failure of the assessee in deducting the Tax Deducted at Source (TDS) on interest payment.

The assessee is engaged in the business of construction of residential buildings. The assessee filed its return of income and subsequently, the assessee’s case was selected for scrutiny assessment and the assessment was completed under Section 143(3) of the Income Tax Act. The assessment was reopened under Section 147 of the Income Tax Act by issuing notice under Section 148 of the Income Tax Act.

The Assessing Officer (AO) recorded reason for issuing notice under Section 148 of the Income Tax Act that the assessee has not deducted TDS under Section 194A of the Income Tax Act on interest payment made by the assessee to the extent of Rs.1,43,15,144/- to Reliance Home Finance Pvt. Ltd. Consequently, the AO completed reassessment and passed order under Section 143(3) read with Section 147 of the Income Tax Act.

The Commissioner of Income Tax (Appeal) [CIT(A)] held that the completed assessment was reopened after the expiry of four years and nothing is coming out of the reason that there is a failure on the part of the assessee to disclose any material fact necessary for the completion of its assessment for the relevant assessment year. Hence, the assessment reopened under Section 147 read with Section 148 of the Income Tax Act as bad in law and accordingly, quashed the reassessment.

The Tw-member bench comprising of Mahavir Singh (Vice-President) and Manjunatha G (Accountant member) held that reopening was beyond 4 years and as the original assessment was framed under Section 143(3) of the Income Tax Act, the Revenue could not establish any failure on the part of the assessee to disclose any material facts necessary for its assessment, the reopening in the present case was bad in law. Hence, the bench found no infirmity in the order of CIT(A), and the same was confirmed. Therefore, the appeal of the Revenue was dismissed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates