2014 (9) TMI 1241 - AT - Income Tax

Reopening of assessment u/s 147 - assessee argued that time for issuance of notice u/s 143(2) of the Act was very much available at the time of initiation of re-assessment proceedings for the reason that validly filed return of income is pending assessment and proceedings have not been terminated or come to an end - HELD THAT - As relevant assessment year involved is 2005-06 and assessee has filed its return of income for A.Yr.2005-06 on 06.10.2005 within the time prescribed u/s 139(1) of the Act. The AO issued notice u/s 148 of the Act dated 24.07.2006. Admittedly there is time left for issuance of notice u/s 143(2) of the Act i.e. 12 months from the date of filing of return of income and in the present case the return was filed on 06.10.2005 and notice u/s 143(2) of the Act can be issued by the Revenue upto 31.10.2006. We find that the issue is fully covered by the decision of CIT vs Qatalys Software Technologies Ltd 2008 (7) TMI 240 - MADRAS HIGH COURT as held no action could be initiated under section 147 of the Act when there is a pendency of the return before the Assessing Officer. The reasons given by the Tribunal are based on valid materials and evidence and we do not find any error or illegality in the order of the Tribunal so as to warrant interference - Decided in favour of assessee.

Summary

Issues:
1. Validity of re-assessment proceedings under section 147 of the Income Tax Act.
2. Interpretation of the time limit for issuance of notice under section 143(2) of the Act.
3. Applicability of the decision of the Hon'ble Madras High Court in similar cases.

Analysis:
1. The appeal in question pertains to the validity of re-assessment proceedings initiated under section 147 of the Income Tax Act. The appellant contended that the initiation of re-assessment proceedings was improper as the time for issuance of notice under section 143(2) of the Act was available. The appellant relied on the judgment of the Hon'ble Madras High Court in the case of CIT vs Quatalys Software Technologies Ltd. The respondent, however, supported the orders of the lower authorities.

2. Upon careful consideration of the facts and circumstances, it was found that the relevant assessment year was 2005-06, and the appellant had filed the return of income within the prescribed time under section 139(1) of the Act. The Assessing Officer issued a notice under section 148 of the Act, but there was still time left for the issuance of notice under section 143(2) of the Act. The time limit for issuing notice under section 143(2) had not expired, as per the provisions of the Act and the return filing date. The decision of the Hon'ble Madras High Court in a similar case was cited, supporting the appellant's position.

3. The Tribunal referred to the decision of the Hon'ble Madras High Court in the case of CIT vs Qatalys Software Technologies Ltd, where it was held that reassessment proceedings cannot be initiated under section 147 when the time for issuing notice under section 143(2) has not expired. The Tribunal's decision was in favor of the assessee, aligning with the principles established by previous judgments. The Division Bench of the court upheld the Tribunal's decision, emphasizing that no action could be initiated under section 147 when the return was pending before the Assessing Officer. Consequently, the appeal of the assessee was allowed based on the precedent set by the Hon'ble Madras High Court and the lack of adverse judgments presented by the Revenue.

In conclusion, the judgment highlighted the importance of adhering to the statutory timelines for initiating re-assessment proceedings and upheld the decision in favor of the assessee based on established legal principles and precedents.