Income Tax Reassessment Initiated During Pending Assessment Proceedings: Delhi HC Sets Aside Order for Lack of Jurisdiction [Read Order]
The Court ruled that reassessment proceedings cannot be initiated unless the initial assessment is concluded
Income Tax Reassessment Initiated During Pending Assessment Proceedings
Income Tax Reassessment Initiated During Pending Assessment Proceedings
The High Court of Delhi,set aside the reassessment order issued under Section 148 against the petitioner, holding it was without jurisdiction as the original scrutiny assessment under Section 143(2) of Income Tax Act,1961, was still pending.
Salesforce.Com Singapore PTE Ltd,petitioner-assessee,filed its return of income for AY 2018–19 on 30.11.2018. The return was selected for complete scrutiny due to a large refund claim. A notice under Section 143(2) was issued on 22.09.2019, followed by a notice under Section 139(9) on 15.11.2019. The assessee then filed a rectified return on 22.11.2019, declaring an income of ₹2,69,11,690.
While the assessment was still pending, the Assessing Officer ( AO )issued a notice under Section 148A(b) on 30.03.2022, and later passed an order under Section 148A(d) on 11.04.2022, stating it was a fit case for reassessment. A notice under Section 148 was also issued.
The Court noted that reassessment proceedings could not be initiated while the original assessment was ongoing. Since there was no concluded assessment, there was no question of income having escaped assessment. The department’s counsel could not point to any provision allowing such reopening during pending assessment.
It held that the reassessment proceedings were invalid as they were started while the original assessment was still pending. On this ground alone, the assessment order passed under Section 148 was set aside.
The petitioner had filed a return in response to the Section 148 notice on 05.05.2022, which matched the rectified return filed earlier. The AO then passed an assessment order on 23.06.2022, determining total income at ₹2,99,76,05,864, including ₹2,97,06,94,174 added as CRM receipts, which were treated as Fees for Technical Services (FTS) under the Act and the India-Singapore Double Taxation Avoidance Agreement (DTAA).
Despite this final assessment, the AO continued parallel reassessment proceedings and issued a draft order on 26.03.2024, again treating CRM receipts (₹2,95,20,84,409) as FTS.
The DRP, following the ITAT ruling, directed deletion of the CRM-related additions. Meanwhile, the department’s appeal against the ITAT order was dismissed by the High Court on 11.12.2024, which relied on an earlier decision for earlier years (AY 2010-11 to 2017-18) where it had already ruled in favour of the petitioner on the same issue.
The petitioner informed the AO about these rulings, but the AO still passed the impugned reassessment order. The Court found this order to be without jurisdiction and noted that the issue had already been settled in favour of the petitioner. The Supreme Court had also dismissed the department’s appeal on 15.04.2025.
Justice Vibhu Bakhru and Justice Tejas Karia allowed the writ petition and set aside the impugned assessment order. Pending applications wee also disposed of.
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