Saturday, 29 February 2020

Validity of Reassessment


  1. Assessee filed the return of income on 31/07/2013 u/s 139(1) by declaring the income of Rs. 5 Crores for AY 2012-2013. It was duly processed u/s 143(1) without any variation. Assessee is in the business of manufacture and export of garments.
  2. Assessment was framed by Additional Commissioner of Income Tax wherein depreciation on factory premises at Jaipur was disallowed. Depreciation claimed was Rs 75 Lakh.
  3. Being aggrieved by the order, assessee filed an appeal before Commissioner of Income Tax Appeal wherein CIT A inquired about the source of the acquisition of the factory premises, during October 2019. It was found that premises were acquired on 20-03-2010.
  4. In opinion of the CIT A, source of the funds for the acquisition of the factory premises was not proven satisfactorily. He directed assessing officer to initiate the reassessment to tax the source of the funds.
  5. AO issued the notice & framed the re-assessment and held that source of the funds for the acquisition of the factory premises was not proven satisfactorily and added Rs 50 Crores to the returned income.

You are required to comment if
A. Assessment order of the AY 2012-13, is valid or not (Hint: Section 2(7A)
B. Direction of CIT A in para 4 is valid or not (Hint: Section 150)
C. Would your answer to Q. ‘B’ be different if property in question is situated in London UK. (Hint: Section 149)

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