July 2022
Reassessment — Notice — Limitation — Exception where reassessment to give effect to order of Tribunal — Assessment not made for giving effect to any appellate order — No finding or recording of reason that income has escaped assessment on account of failure of assessee to disclose truly and fully all material facts — Notice and order rejecting objections unsustainable
By K. B. Bhujle
Advocate
26 Sea Sagar Construction Co. vs. ITO [2022] 444 ITR 385 (Bom) A.Ys.: 2001-02 to 2003-04 Date of order: 6th May, 2022 Ss. 147, 148, 149 and 150 of ITA, 1961
Reassessment — Notice — Limitation — Exception where reassessment to give effect to order of Tribunal — Assessment not made for giving effect to any appellate order — No finding or recording of reason that income has escaped assessment on account of failure of assessee to disclose truly and fully all material facts — Notice and order rejecting objections unsustainable
The assessee was in the construction business. The contractor from whom the assessee took over two projects followed the completed contract method of accounting. The Assessing Officer was of the view that a part of the income from the project should be assessed to tax based on the percentage completion method and reopened the assessments for the A.Ys. 2001-02, 2002-03 and 2003-04 u/s. 147 of the Income-tax Act, 1961 by issue of notice u/s. 148 dated 19th January, 2012. The objections filed by the assessee were rejected.
The Bombay High Court allowed the writ petition filed by the assessee and held as under:
“i) There was no specific finding that income chargeable to tax had escaped assessment for the A.Ys. 2001-02, 2002-03 and 2003-04 nor was there a direction to the Assessing Officer to initiate reassessment proceedings u/s. 147 by issuing notices u/s. 148. On the contrary, the Tribun
