The Gujarat High Court (Ahmedabad Bench) ruled that the AO does not have the power to review his own assessment arrived at during the original assessment. Accordingly, the Court quashed both the notices passed under Section 148A(d) of the Income Tax Act as well as the reopening notice under Section 148, which were issued on the same date.
The Court found that the taxpayer had provided all the information, and the same was considered by the AO, and the reasons recorded in the notice issued under Section 148A(b) of the Income Tax Act were already considered by the AO during the original assessment.
The Division Bench comprising Justice Bhargav D. Karia and Justice Pranav Trivedi observed that the proceedings under Section 148 cannot be initiated to review the earlier stand adopted by the AO, and he cannot initiate reassessment proceedings to relook at the documents filed in the original assessment proceedings.
The Bench added that the power to re-examine cannot be exercised from time to time. Reference was made to the decision of the Apex Court in the case of Commissioner of Income Tax, Delhi v. Kelvinator of India Limited [(2010) 320 ITR 561], which has categorically settled this issue.
Briefly, in this case, the petitioner, an individual engaged in the business of data selling and purchasing under the trade name ‘Excellere Outsourcing Services’, filed his return declaring Rs. 3.68 lacs, and the assessment under Section 147 read with Section 144B was passed. Subsequently, his return was reopened under the new regime, based on information about huge cash deposits made in his bank accounts. The information was also received on the insight portal regarding the purchase and sale of cryptocurrency.
Resultantly, a show-cause notice was issued proposing to make additions of Rs. 8.77 lacs as short-term capital gains on the sale of cryptocurrency. This was opposed by the petitioner, contending that said transactions were entered in the due course of his business and the same were already declared in his business returns. Later, AO passed an order under Section 148A(d) holding that the income to the tune of Rs. 59.89 lacs had escaped the assessment, which was the cornerstone of the challenge.
Case Relied On:
Commissioner of Income Tax, Delhi v. Kelvinator of India Limited [(2010) 320 ITR 561]
Appearances:
Advocate SN Divatia, for the Petitioner/ Taxpayer
Advocate Varun K. Patel, for the Respondent/ Revenue
