Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 862 - HC - Income TaxReassessment u/s 147 - Applicability of Advance Rulings in the own case of assessee or Advance Rulings in case of any other assessee - Whether in view of the binding nature of the ruling pronounced under Section 245-R by AAR, which is binding on applicant and revenue in respect of applicant and the said transactions, can the AO, relying on ruling in the case of another Applicant where AAR has taken a different view, form a reason to believe that income chargeable to tax has escaped assessment? - HELD THAT:- AO has manifestly exceeded his jurisdiction while proposing to re-open Petitioner’s assessment relying on ruling of AAR in the case of Cyril E. Pereira [1999 (5) TMI 582 - AUTHORITY FOR ADVANCE RULINGS] The ruling in Cyril E. Pereira (supra) while considering the provisions of Section 245-S of the Act cannot bind Petitioner nor can it displace the binding effect of ruling in Petitioner’s case. There was no dispute before the Court that the transaction in respect of which Petitioner sought a ruling and in respect of which AAR had issued ruling to Petitioner is of the same nature as that for the Assessment Years in question. In view of the clear mandate of Section 245-S of the Act that a ruling would apply and be binding only on the Applicant and the Revenue in relation to the transaction for which it so sought, it is clearly evident that the Assessing Officer has ignored this clear mandate. The ruling in Cyril E. Pereira (supra) cannot as a matter of plain intendment and meaning of Section 245-S of the Act displace the binding character of the ruling rendered between Petitioner and the Revenue. Section 245-S of the Act states that advance pronouncement binds the authority under Section 245-R. It was binding on the Applicant who had sought in respect of the transactions in relation to which the ruling had been sought and on the Commissioner and the Income Tax Authority subordinate to him in respect of Applicant and the said transaction. Sub-section 2 of Section 245-S of the Act constitutes that the ruling shall be binding unless there is change in law or facts on the basis of which Advance Ruling has been pronounced. There was no change in law or facts that has taken place before us or mentioned in the reasons to believe. The subsequent ruling in Cyril E. Pereira (supra) cannot be stated to be covered under sub-section (2) of section 245-S of the Act. It cannot be considered as a ruling that changes the law. For the reasons mentioned above, the impugned notices have to be quashed and set aside. Merely because the AAR in the case of another Applicant has taken a different view, cannot be sufficient basis on which Respondent No. 1 could ever have any reason to believe that income chargeable to tax has escaped assessment. It can also be stated that Respondent No. 1 has not personally formed the belief that income liable to tax has escaped assessment and has abdicated her jurisdiction. The re-opening therefore is invalid. Respondent No. 2 has plainly ignored the relevant provisions of law. We cannot hold that the Assessing Officer had any tangible material to come to the conclusion that there was an escapement of income. Hence, the power to re-open the assessment could not have been exercised. Decided in favour of assessee.
|