No reassessment if disputed transaction was already considered in block assessment as well in sec. 263 revision: HC

Case details: Seshasayee Paper & Boards Ltd. v. Union of India - [2021] 128 taxmann.com 293 (Madras)

Judiciary and Counsel Details

• • T.S. Sivagnanam and Mrs. V. Bhavani Subbaroyan, JJ.
  • A.L. Somayaji, SC, G. Baskar and M.P. Senthil Kumar for the Appellant. 
  • A.P. Srinivas, SSC and A.N.R. Jayaprathap, JSC for the Respondent.

Facts of the Case

Assessee purchased machineries and leased them back to the seller. Assessee claimed 100% depreciation on these machineries. A search was conducted on assessee’s premises. Depreciation claimed by assessee was held to be an undisclosed income. On appeal, ITAT quashed the block assessment order and held that the claim of depreciation would not fall within the meaning of the expression undisclosed income.

Parallelly, scrutiny assessment was done by the Assessing Officer (AO), wherein AO held that the claim of depreciation having been dealt with in block assessment there was no need to consider same again. After that, the Commissioner of Income-tax (CIT) invoked Section 263 and passed an order which was also set aside by the High Court. After that, AO issued a notice under section 148 for reopening the assessment. The assessment was reopened for the same transactions considered in the block assessment and the proceedings under Section 263.

High Court Held

On appeal, Madras High Court held that the material, which was already placed on record and considered in earlier two rounds of litigation, could hardly be a reason to reopen the assessment. The revenue attempts to reopen a settled issue solely based upon a change of opinion. The revenue was silent and has not disclosed as to what was the tangible material, which was now available with them more than those that were available with the revenue in the earlier two rounds of litigation. Therefore, it could be held that what the revenue seeked to do was not reopen the assessment but to review the earlier orders, which had attained finality.

Case Review

• • Smt. Mira Ananta Naik v. Dy. CIT (Investigation) [2009] 183 Taxman 40 (Bom.) (para 35)
  • Fenner (India) Ltd. v. Dy. CIT [1999] 107 Taxman 53/[2000] 241 ITR 672 (Mad.) (para 36) followed.

List of Cases Referred to

• • GKN Driveshafts (India) Ltd. v. ITO [2002] 125 Taxman 963/[2003] 259 ITR 19 (SC) (para 8)
  • T.V. Mylsamy v. Dy. CIT [W.P.No. 27598 of 2008, dated 29-1-2018] (para 14)
  • Smt. Mira Ananta Naik v. Dy. CIT (Investigation) [2009] 183 Taxman 40 (Bom.) (para 20)
  • Fenner (India) Ltd. v. Dy. CIT[1999] 107 Taxman 53/[2000] 241 ITR 672 (Mad.) (para 20)
  • CIT v. Elgi Finance Ltd. [2006] 165 Taxman 124/286 ITR 674 (Mad.) (para 20)
  • CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312/320 ITR 56 (SC) (para 41)
  • ITO v. Techspan India (P.) Ltd. [2018] 92 taxmann.com 361/255 Taxman 152/404 ITR 10 (SC) (para 41)
  • ITO v. Sanjeev Ghei [2019] 104 taxmann.com 81/262 Taxman 264 (SC) (para 41)
  • Asstt. CIT v. ICICI Securities Primary Dealership Ltd. [2012] 24 taxmann.com 310/348 ITR 299/(SC) (para 41).