Reassessment- Ss. 147, 148, 152 of I. T. Act, 1961- A. Y. 2011-12- Effect of section 152- Reassessment not resulting in assessment of higher income

For the A. Y. 2011-12, the assessee had filed return of income computing a loss of Rs. 77,51,810/- and a book profit of Rs. 35,96,518/- and the same was processed u/s. 143(1) of the Income-tax Act, 1961. The assessment was reopened by issuing notice u/s. 148 proposing to make an addition of Rs. 81,18,000/- to the normal income. The objections filed by the assessee were rejected.

The Gujarat High Court allowed the writ petition filed by the assessee and held as under:

“i)    The learned counsel for the petitioner has drawn the attention of the court to the provisions of section 152(2) of the Act, which provides that where an assessment is reopened u/s. 147, the assessee may, if he has not impugned any part of the original assessment order for that year either u/ss 246 to 248 or u/s. 264, claim that the proceedings u/s. 147 shall be dropped on his showing that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made. It was submitted that in view of the above provision, the proceedings are required to be dropped because even if the income which is alleged to have escaped assessment is taken into account, the petitioner would not be assessed at a higher amount.

ii)    The controversy stands squarely concluded by the decision of this court in the case of India Gelatine and Chemicals Ltd. Vs. ACIT; 364 ITR 649 (Guj), wherein the court in a case where the assessee had declared a loss of Rs. 1.44 crores under the normal computation and the assessment was framed on book profits of Rs. 2.89 crores, had held that even if the expenditure of Rs. 116.86 lakhs is disallowed, there would no change in the resultant change in the petitioner’s tax liability since the petitioner had already paid much higher tax and had allowed the petition.

iii)    It appears that the Revenue had accepted the said decision and had not challenged the same before the higher forum. The learned counsel for the Respondent has urged that the decision requires reconsideration. Having regard to the facts and circumstances of the case, as well as the fact that the Revenue had accepted the said decision, the court does not find any reason to refer the matter for consideration to a larger bench.

iv)    For the foregoing reasons, the petition succeeds and is accordingly allowed.”