KLM Royal Dutch Airlines (reassessment)

[admin2]

Scope of reassessment under s. 147 of the Act.

- During the pendency of a return filed under section 139 of the Act along with the refund application under section 237 of the Act, action could not have been taken under section 147/148 of the Act.
-the decision of the Division Bench in Consolidated Photo and Finvest Ltd. -vs- Assistant Commissioner of Income-Tax, [2006] 281 ITR 394(Delhi), inasmuch as it is irreconcilable with the views of the Full Bench in Commissioner of Income-Tax -vs- Kelvinator of India Ltd., [2002] 256 ITR 1, must be held not to lay down the correct law.
-If the assessment is not framed before the expiry of the period of limitation for a particular AY, it would have to be assumed that since proceedings had not been opened under Section 143(2), the Return had been accepted as correct. Thereafter recourse could be taken to Section 147 only if fresh material had been received by the AO after the expiry of limitation fixed for framing the original assessment.
-wherever and whenever it appears to the High Court that proceedings have been initiated or are continuing without the authority of the law the High Court would be in dereliction of duty if it hesitated in exercising the extraordinary powers contained under Articles 226/227 of the Constitution of India.

KLM ROYAL DUTCH AIRLINES vs. ADIT (Delhi High Court) dated 12.01.2007 (download pdf 50kb from http://www.itatonline.org/judgements_highcourt.php)