Standard Chartered Finance Limited vs. CIT (Supreme Court)

DATE: February 9, 2016 (Date of pronouncement)
DATE: March 7, 2016 (Date of publication)
AY: 1997-98
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Reopening of assessment: If no assessment order is passed, there cannot be a notice for re-assessment inasmuch as the question of re-assessment arises only when there is an assessment in the first instance

The issue for consideration relates to the Assessment Year 1997-98 under the Interest Tax Act, 1974. On the return filed by the appellant/assessee for this Assessment Year, no assessment order was passed. However, much after the last date of the Assessment Year is over, the Assessing Officer sought to re-open the assessment by issuing notice under Section 10 of the Act and thereafter proceeded to re-assess the interest chargeable under the aforesaid Act. The matter was carried in appeal by the assessee. The main contention of the assessee was that when there was no assessment order even passed in the original proceedings there was no question of re-opening the so-called assessment and make the re-assessment. The Commissioner of Income Tax (Appeals) accepted the aforesaid contention and set aside the re-assessment order. This order was upheld by the Income Tax Appellate Tribunal as well. However, in further appeal filed by the Revenue before the High Court, the High Court reversed the view taken by the Tribunal holding that even if there was no original assessment order passed under Section 10 of the Act, there could be re-assessment. The High Court held that the judgment of the Supreme Court in Trustees of H.E.H. The Nizam’s Supplemental Family Trust v. CIT [2000]242 ITR 381 SC would not govern the case at hand. On appeal by the assessee to the Supreme Court HELD reversing the High Court:

We are of the opinion that the High Court has wrongly not acted upon the ratio laid down in Trustees of H.E.H. The Nizam’s Supplemental Family Trust’s which squarely applies in the instant case in favour of the assessee. The ratio of the said judgment is that in those situations where there is no assessment order passed, there cannot be a notice for re-assessment inasmuch as the question of re-assessment arises only when there is an assessment in the first instance.

Note 1: In Trustees of H.E.H. The Nizam’s Supplemental Family Trust v. CIT [2000]242 ITR 381 SC the s. 147 notice was issued during the pendency of the period for passing a regular assessment order. It was held “It is settled law that unless the return of income already filed is disposed of notice for reassessments under Section 148 cannot be issued, i.e., no reassessment proceedings can be initiated so long as assessment proceedings pending on the basis of the return already filed are not terminated“. In the present case, the reopening notice was issued much after the expiry of the time limit.
Note 2: S. 10 of the Interest-tax Act does not contain a provision similar to Explanation 2 of s. 147 that a case where an assessment order is not passed is deemed to have escaped assessment.
3 comments on “Standard Chartered Finance Limited vs. CIT (Supreme Court)
  1. Sekhar ramamoorthy says:

    Sec 147 of the IT Act 1961, however expressly lays down that Sec 143(1) intimations will also come within its ambit and in fact, ( compared to Sec 143(3) scrutiny assessment cases) permits a longer period of back assessment in such cases( where only the process of intimation u/s 143(1) was completed).

  2. Ca Deepak Soni says:

    This decision is under the provisions of the Interest Tax Act and the Honourable Supreme court has interpreted the said provisions only and by no stretch of the imagination it can be applied to the proceedings under the Income tax act .

  3. Again it is a clear case of not able to understand simple English , the revenue officer is not able to differentiate between Assessment and and re-assessment.

    I suggest the court no need to be highly civil with these uncivil men, how great UPSC selected these guys, perhaps UPSC is also some hodge podge type recruitment agency it appears.

    Better use take reasonably right recruiters in UPSC, if the govt fails better stop all tax collection, do whatever is okay with you -the great govt of india. sickening , please.

    we cannot allow i mean the public cannot allow this useless revenue to waste the precious time of the supreme court.

    if you don’t want learn; better resign from revenue dept forthwith mr revenue men.

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