THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S.SUNTEC BUSINESS SOLUTIONS PVT LTD.

Facts

The Revenue, Principal Commissioner of Income Tax, Thiruvananthapuram, appealed against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated October 26, 2018. The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals), which cancelled a re-assessment order passed by the Revenue under Section 144 read with Section 147 of the Income Tax Act, 1961. The cancellation was based on the finding that the notice issued under Section 148 of the IT Act, alleging non-filing of a return for assessment year 2006-07, was unsustainable. The assessee, M/s. Suntec Business Solutions Pvt Ltd., had initially filed a return for assessment year 2006-07 with a specific PAN. Subsequently, a new PAN was allotted. The Revenue initiated re-assessment proceedings citing non-filing of the return. The assessee contended that the return was indeed filed and provided an acknowledgement, and an attempt to e-file the return after receiving the Section 148 notice was unsuccessful.

Held

The High Court held that there was no substantial question of law to be considered under Section 260A of the Income Tax Act, 1961. The Court found no valid reason to interfere with the findings of the appellate authorities, which were based on factual aspects. Both the Commissioner (Appeals) and the ITAT had concurrently held that the assessee could not be faulted for quoting the PAN number that was duly allotted and valid at the time of filing the return. Consequently, the re-opened assessment was deemed unsustainable. The appeal filed by the Revenue was dismissed.

Key Issues

1. Whether the appellate authorities were right in quashing the re-assessment proceedings initiated under Section 147 of the Income Tax Act, 1961, on the ground that the proceedings were without any valid reason? (Question of mixed law and fact, concerning Section 147 and Section 148 of the IT Act). Assessee's Contentions: The assessee argued that a return for assessment year 2006-07 was filed on November 29, 2006, and an acknowledgement was provided. They also stated that an attempt to e-file the return after receiving the Section 148 notice was unsuccessful. Revenue's Contentions: The Revenue contended that no return of income was filed for assessment year 2006-07, leading to income chargeable to tax escaping assessment under Section 147. They issued a notice under Section 148 based on this premise. The Revenue's appeal to the High Court implicitly argues that the appellate authorities erred in cancelling the re-assessment.