SHETH BROTHERS vs. DEPUTY COMMISSIONER OF INCOME TAX

PDF · subscribers
ITA/39/2004HC KeralaKLHC01022402200413 March 2008Author: HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the limitation period for reassessment under Section 147 is to be computed with reference to the first statutory notice issued, not any subsequent notice. The court rejected the assessee's proposition that the time limit should be calculated from the second notice. Regarding the merits, the Tribunal rightly upheld the addition. The assessee had accounted for net interest, leading to an escapement of Rs. 60,608/- in interest received from the bank. The deduction of interest claimed by the assessee and its set-off were not permissible under the Act. Therefore, the Tribunal's decision to reject the assessee's claim was found to be correct. The appeal was dismissed.

What were the facts?

The assessee, M/s. Sheth Brothers, filed an appeal before the High Court of Kerala challenging an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The appeal concerned assessment years not explicitly stated in the judgment. The core dispute revolved around the reopening of assessment under Section 147 and subsequent additions made by the revenue. The ITAT had upheld the reopening and the additions. The assessee contended that the limitation period for reopening should be calculated from the date of the second notice issued, not the first. The revenue argued that the first notice was issued within the time limit. The addition was related to the disallowance of interest paid and the escapement of interest income received from a bank.

What were the issues?

1. Whether the limitation period for reassessment under Section 147, following the issuance of a notice under Section 148, should be computed with reference to the first statutory notice issued or a subsequent notice. (Question of law) 2. Whether the addition made by the revenue, pertaining to the disallowance of interest paid and the escapement of interest income received from a bank, was justified. (Question of mixed law and fact) Assessee's contentions: - The time limit for reassessment should be computed with reference to the second notice issued under Section 147/148, not the first. Revenue's contentions: - The first notice for reopening was issued within the time limit prescribed by the Act. - The addition was justified as it related to the disallowance of interest paid, which is not allowable, and the escapement of interest income received from the bank.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 153

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 13TH MARCH 2008 / 23RD PHALGUNA 1929 ITA.No. 39 of 2004() -------------------- ITA.246/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: --------------------------- M/S.SHETH BROTHERS, ALAPPUZHA. BY ADV. SRI.A.KRISHNAN RESPONDENTS: ------------- 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - I, ALAPPUZHA. 2. THE COMMISSIONER OF INCOME TAX(APPEALS) -IV, KOCHI. 3. INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, KOCHI. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT FOR R1 & 2 SRI.GEORGE K. GEORGE, SC FOR IT FOR R1 & 2 THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 13/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. .................................................................... I.T. Appeal No.39 of 2004 .................................................................... Dated this the 13th day of March, 2008.

JUDGMENT C.N.Ramachandran Nair, J. Heard counsel for the appellant and Senior Standing Counsel for the respondents. We do not find any ground to interfere with the order of the Tribunal because the questions raised both on limitation against re- assessment under Section 147 after issuing notice under Section 148 and the justification for the addition are based on pure finding of facts. On limitation the Income Tax Appellate Tribunal found that the first notice for reopening was issued in time and the addition was found to be attributable to disallowance of deduction of interest paid which is not allowable under the Act. The assessee also does not dispute that notice under Section 147 was served within the time limit. However, the assessee's case is that when a second notice is issued, time limit has to be computed with reference to the issue of second notice. We are unable to accept this proposition because Section 153 of the Act provides for limitation with reference to the first statutory notice issued. So far as the merits of the case is concerned, it is seen that petitioner has accounted only net interest which has resulted in 2 escapement of Rs.60,608/- towards interest received from Bank. The deduction of interest claimed by the petitioner and set off of the same is not permissible under the Act. We, therefore, find that the Tribunal rightly rejected the claim of the assessee. The appeal is accordingly dismissed. C.N.RAMACHANDRAN NAIR Judge T.R.RAMACHANDRAN NAIR Judge pms

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →