The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 147 is not an alternative to Section 263 and quashes assessment order u/s 147 without jurisdiction.
The appellant, M/s. Plaza Cable Industries Ltd., filed its Income tax return declaring a loss of Rs.7,06,97,714/-, and the assessment was selected for scrutiny assessment. Subsequent to the completion of the assessment under Section 143(3) of the Act, a notice under Section 148 of the Act was issuedto reopened and include certain income which has allegedly escaped earlier assessment.
Before the first appellate authority dismissed the appeal and then assessee filed second appeal before the Tribunal. Theassesseechallenged the jurisdiction assumed under Section 147 read with Section 148 of the Act and further challenged the disallowance in relation to prior period expenses to the tune of Rs.19,37,322/- in theassessment framed in pursuance of proceedings under Section 147 of the Act.
Mr. Pradip Kumar Kedia, Accountant Member and Mr. Narender Kumar Choudhry, Judicial Member has observed that the AOhas resorted to Section 147 of the Act primarily as alternative to Section 263 or Section 154 owing to the admitted fact that the action under Section 263 cannot be taken due to bar of limitation. As further asserted by the AO, the rectification under Section 154 also cannot be taken. The Tribunal further observed that theinvocation of jurisdiction under Section 147 is governed by its own set of stringent statutory requirements and is not alternative to the provisions of Section 263 of the Act.
The Tribunal further held that it is not known, what material facts were not brought on record by the assessee in the course of original assessment. The salutary burden placed on the Assessing Officer under the 1st proviso is not discharged at all. The jurisdiction under Section 147 was exercised in a most flippant and nonchalant manner.
The Tribunal has held that “the jurisdiction assumed under Section 147 in this backdrop is ex-facie vitiated and thus requires to be struck down at the threshold. The impugned assessment framed under Section 147 r.w. Section 143(3) is clearly bad in law in the absence of any valid jurisdiction. Consequently, the impugned assessment order dated 04.11.2011 framed in pursuance of nonest jurisdiction stands quashed”.
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