AO cannot reassess any income that was the subject matter of an appeal: Bombay HC
Shri Shanmukhananda Fine Arts Versus The Deputy Director of Income Tax (Exemptions) (Writ Petition No. 2689 Of 2015)
Facts:
- The petitioner has been granted registration under Section 12A of the Income Tax Act, 1961, by the Commissioner of Income-tax, which is still in force.
- The petitioner filed its original return of income, claiming exemption under Section 11 of the Income Tax Act, but faced challenges from the Assessing Officer regarding denial of exemption, computation of taxable income, and disallowance of expenses.
- The petitioner appealed these decisions before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT), which ultimately ruled in favor of the petitioner, restoring the exemption and dismissing the department’s appeals.
- Despite these rulings, the department issued a notice under Section 148 of the Income Tax Act, seeking to reopen the assessment, citing reasons related to alleged commercial activities and denial of exemption under Section 11.
- The petitioner objected to the reopening of the assessment, arguing that the issues raised were already addressed in previous appeals and therefore cannot be reopened.
Hon Bombay HC Order:
- The grant of benefit under Section 11 of the Act, was the subject matter of appeal and has been held in favour of the assessee, the matter cannot be reopened.
- As per the third proviso to Section 147 of the Act, the Assessing Officer cannot reassess any income that was the subject matter of an appeal.
- So the matter related to exemption U/S 11 cannot be reopened.
The copy of the order is as under:
