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ITAT Delhi in the case of MTNL v. DCIT and vice-versa in ITA Nos. 5292, 5957/Del/2014 dated 25.10.2017

·            Reassessment proceedings of assessee for A.Y. 2007-08 were initiated by the AO stating that the interest on customer’s deposits was wrongly allowed to the assessee. The reasons recorded by the AO were based on the order passed by the AO in respect of A.Y. 2006-07, where the AO disallowed the entire customer deposits.

·            The CIT(A) upheld the initiation of reassessment proceedings but, on merits, allowed partial relief to the assessee.

·            Tribunal took note of the fact that the assessment order for A.Y. 2006-07 and for the A.Y. under consideration was passed by the same AO and that too, on the same date. Tribunal further observed that though the AO made an addition of whole amount of deposits in A.Y. 2006-07, but did not make any addition in the original assessment order passed for the year under consideration.

·            Tribunal was of the view that having accepted the deductibility of interest on deposits in the original assessment order passed for the year under consideration, the AO later could not take the cognizance of the assessment order passed for A.Y. 2006-07.

·            Tribunal was also of the view that there should be some tangible material in the possession of the AO after passing the original order which can form the basis for indicating that income chargeable to tax has escaped assessment.

·            Therefore, relying upon the judgment of Hon’ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561, the Tribunal held the initiation of reassessment proceedings to be invalid observing that the same was merely on the basis of change of opinion and without there being any tangible material.

 

For further reading, refer the attachment. 

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Posted on: 31-10-2017