Jt. CIT v. Bombay Dyeing Mfg. Co. Ltd.
ITA Nos. 1632 and 2208 (Mum.) of 2006
A.Y. : 1998-99. Dated : 16-4-2009.
S. 14A r.w. S. 143(3) and S. 147 — Proviso to S. 14A
inserted by Finance Act, 2002 w.e.f. 11-5-2001 does not confer any
jurisdiction on Assessing Officer to make reassessment u/s.147 for any
assessment year beginning on or before 1-4-2001.
For the relevant A.Y. 1998-99, the Assessing Officer issued
notice u/s.148 on 21-4-2004, with a view to reopen the concluded assessment
and disallowed certain expenses, which the assessee had claimed as deduction,
on account of exempted income u/s.14A. On appeal, the CIT(A) upheld the order
of the Assessing Officer.
The Tribunal held that the disallowance made was contrary
to the proviso to S. 14A, as the same was not permissible under reassessment
proceedings u/s.147 in respect of the assessment year beginning on or before
1-4-2001.
The Tribunal noted as under :
1. A bare perusal of the proviso to S. 14A clearly
demonstrates the legislative intent in placing absolute embargo on the
jurisdiction of the Assessing Officer to re-assess the case u/s.147. Having
regard to the express legislative intent, as enshrined by the Parliament,
vide the Finance Act 2002, w.e.f. 11-5-2001, the Assessing Officer ceases to
have any jurisdiction to re-assess any case u/s.147. In such a statutorily
explicit and undisputed position, the question of reopening of the case or
initiation of the re-assessment proceedings u/s.147 r.w. S. 148, is
inconceivable and incomprehensible. Thus, in the absence of existence of
statutory jurisdiction, in terms of proviso to S. 14A with the Assessing
Officer, to make reassessment u/s.47 the very discussion on the validity or
otherwise of assumption of such jurisdiction, by way of issuance of the said
notice u/s.148, is irrelevant and an exercise in futility.
2. The CBDT issued Circular No. 11 of 2001, dated
23-7-2001, and placed restrictions on reopening of completed assessments, on
account of provisions of S. 14A. The said circular clearly demonstrates the
legislative intent in interpreting the newly inserted proviso to S. 14A.
3. The Circulars issued by the CBDT are binding on the
Assessing Officer, even where the same are not in consonance with the
meaning of the provisions, if they are benevolent and issued to mitigate the
hardship of the assessee. It is pertinent to add that the Assessing Officer
had ignored the said Circular of the Board and judicial mandate of the Apex
Court as contained in the various decisions and initiated reassessment
proceedings, in the instant case, despite there being express exclusion of
such jurisdiction of the Assessing Officer by the proviso to S. 14A.
