1. Reassessment — Reopening after limitation — Change in law by Supreme Court reversal — Section 147/149(1A) of Income Tax Act. (Para 2 )
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2012 Supreme(SC) 2580
SUPREME COURT OF INDIA
S.H. Kapadia, CJI., Madan B. Lokur, J.
Deputy Commissioner of Income Tax & Ors. - Appellants
Versus
Simplex Concrete Piles (India) Ltd. - Respondent
Civil Appeals No. 2329 of 2006 with No. 2331, 2330 of 2006 and 6404 of 2012 (Arising out of SLP (C) No. 18237 of 2006)
Decided On : 11-09-2012
Advocates Appeared:
For the Appellants :- R.P. Bhatt, Sr. Adv., Arijit Prasad, Rahul Kaushik, A. Subhashini, Anil Katiyar for Mr. B.V. Balaram Das, Advocates.
For the Respondent:- Vikas Singh, Sr. Adv., K.V. Mohan, K.V. Balakrishnan, Satyen Sethi, Arta Trana Panda, Mansi Gautam, Geetanjali Mohanm, S.D. Singh, Vijay Kumar, Bharti Tyagi and Kamakshi S. Mehlwal, Advocates.
For the Appellants :- R.P. Bhatt, Sr. Adv., Arijit Prasad, Rahul Kaushik, A. Subhashini, Anil Katiyar for Mr. B.V. Balaram Das, Advocates.
For the Respondent:- Vikas Singh, Sr. Adv., K.V. Mohan, K.V. Balakrishnan, Satyen Sethi, Arta Trana Panda, Mansi Gautam, Geetanjali Mohanm, S.D. Singh, Vijay Kumar, Bharti Tyagi and Kamakshi S. Mehlwal, Advocates.
Assessments cannot be re-opened after the statutory limitation period expires. A subsequent reversal of the legal position by the Supreme Court does not authorize the Department to re-open assessments that were closed based on the law prevailing at the relevant time.
Headnote:(A) Income Tax Act, 1961 - Sections 147/149(1A) and 80-HH - Re-opening of assessment - Limitation period - Once the limitation period of four years provided under Section 147/149(1A) expires, the question of re-opening the assessment by the Department does not arise. (Para 2)
(B) Change in legal position - Assessment closed based on the law declared by the jurisdictional High Court - Subsequent reversal of the legal position by the Supreme Court - Does not authorize the Department to re-open the assessment which stood closed on the basis of the law as it stood at the relevant time. (Para 2)
Facts of the case:
The assessee claimed benefits under Section 80-HH for civil construction work, a view supported by the law declared by the jurisdictional High Court at the time the assessment order was completed. After the assessment was closed, the legal position was reversed by a judgment of the Supreme Court. The Department subsequently sought to re-open the assessment based on this change in law.
Findings of Court:
The court held that there was no error in the observation that re-opening is barred once the four-year limitation period expires. It further held that a subsequent reversal of the legal position by the Supreme Court does not empower the Department to re-open an assessment that was closed under the law prevailing at the relevant time.
Issues: Whether the Department can re-open an assessment after the expiry of the limitation period under Section 147/149(1A) and whether a subsequent judicial reversal of the legal position justifies such re-opening.
Ratio Decidendi: The statutory limitation period for re-opening assessments is binding. A subsequent reversal of a legal interpretation by the Supreme Court does not authorize the re-opening of assessments that were concluded in accordance with the law as it existed at the time of the assessment.
Result: Civil appeals dismissed.
Legal Category Hierarchy
Table of Contents
2. Reopening permissible after limitation expires? — Effect of subsequent Supreme Court decision on closed assessment. (Para 2 )
3. Once limitation period expires, reopening does not arise. Subsequent reversal of law does not authorize reopening of closed assessment. (Para 2 )
4. A concluded assessment cannot be reopened after expiry of limitation based on subsequent judicial reversal of the then-prevailing law. (Para 2 )
5. Civil appeals dismissed. No order as to costs. (Para 3 , 4 )
6. Can an assessment be reopened after the limitation period under Section 147/149(1A) of the Income Tax Act expires?
No, once the four-year limitation period expires, the question of reopening the assessment does not arise. (Para 2 )
7. Does a subsequent reversal of legal position by the Supreme Court authorize reopening of a concluded assessment?
No, the department cannot reopen an assessment closed based on the law as it stood at the relevant time. (Para 2 )
ORDER :
Civil Appeal No. 2329 of 2006 and Civil Appeal No. 6404 of 2012 @ SLP (C) No. 18237 of 2006
1. Heard learned counsel on both sides. Leave granted.
2. We see no error in the observation made by the Division Bench of the High Court in the impugned judgement Simplex Concrete Piles (India) Ltd. v. CIT, (2003) 183 CTR 47 (Cal), that once limitation period of four years provided under Section 147/149(1A) of the Income Tax Act, 1961 (for short, "the Act") expires then the question of re-opening by the Department does not arise. In any event, at the relevant time, when the assessment order got completed, the law as declared by the jurisdictional High Court, was that the civil construction work carried out by the assessee would be entitled to the benefit of Section 80-HH of the Act, which view was squarely reversed in the case of CIT v. N.C. Budharaja and Co., 1994 Supp (1) SCC 280 : (1993) 204 ITR 412. The subsequent reversal of the legal position by the judgment of the Supreme Court does not authorise the Department to re-open the assessment, which stood closed on the basis of the law, as it stood at the relevant time.
3. The civil appeals are, accordingly, dismissed. No order as to costs.
Civil Appeals Nos. 2331 and 2330 of 2006
4. Since the tax amount is meagre, the civil appeals are dismissed. No order as to costs.
