RE-ASSESSMENT |
Question 1 (ID 01) (Revision / Home work)
X Ltd. has leased out a house property owned by it to the customs authorities at a monthly rent of Rs. 40,000. The lease expired on December 31, 1989. X Ltd. gave notice for vacating the premises or alternatively for an increase in the rent of Rs. 60,000 per month with effect from January 1, 1990. The customs authorities continued to occupy the premises and did not agree to increase the rent. The dispute as to the fixation of rent was referred to arbitration in November 1990. The arbitration proceeding continued for about 2 years and finally an award was delivered in January 1993 fixing the rent at Rs. 60,000 per month with retrospective effect from January 1, 1990. The customs authorities disputed the award in the Delhi High Court and ultimately a decree was passed by the Delhi High Court in July 1993 in terms of the award. Thereupon, the customs authorities paid in August 1993 the additional arrear rent of Rs. 20,000 per month for the year 1992-93. In their income-tax returns in respect of the assessment years 1991-92, 1992-93 and 1993-94 X Ltd. had continued to declare its rental income at the old rate of Rs. 40,000 per month and had also indicated by a footnote the fact that its claim for increase in rent from Rs. 40,000 to Rs. 60,000 with effect from January 1, 1990 was disputed by the tenant and the matter was pending before the arbitrator/High Court. The Income-tax Officer on consideration of the aforesaid note completed the assessment of X Ltd., in respect of the assessment years 1991-92 and 1992-93 on November 30, 1993 under section 143(3) on the basis of the old rent of Rs. 40,000 per month as was being received “under protest” by X Ltd. In December 1993, the Income-tax Officer became aware of the decree passed by the Delhi High Court in terms of the award fixing the rent of Rs. 60,000 per month with effect from January 1, 1990.
Advise whether the income-tax Officer should take action for assessing the additional rent of Rs. 20,000 per month now paid in August 1993;
by resort to the reassessment proceeding under section 147;
by resort to the rectification proceedings under section 154;
by initiating proceedings for revision under section 263; or
by assessing the entire arrear rent as income for the assessment year 1994-95 on the basis of receipt, as the company follows cash system of accounting.
Question 2 (ID 02)
During the course of assessment proceedings, the assessee has, inter alia, filed copies of the loan accounts with confirmation letters. On that basis, genuineness of the loans was accepted without making any further enquiry and the assessments were completed under section 143(3). Thereafter, the premises of one S were searched by the department. Certain books and documents were seized. One such book was a diary in which the name of the assessee was noted S stated that the transactions noted by him in the aforesaid diary were bogus and that he was arranging havalas only for his clients. On the basis of the aforesaid information, the Assessing Officer formed reason to believe that certain loans taken by the assessee were not genuine and the assessee’s income for the years in question had escaped assessment. He, therefore, initiates reassessment proceedings under section 147. Discuss whether the action of the Assessing Officer is justified.
Question 3 (ID 03)
An assessment was completed in accordance with directions contained in a circular issued by the Central Board of Direct Taxes. Subsequently the Supreme Court held the circular to be invalid. Can the completed assessment be reopened ?
OR
The assessment was completed by the assessing officer. After that, a circular was issued by CBDT U/s.119. On the basis of that the A.O. initiated the assessment proceedings U/s.147 due to, concealment of income noticed. In the reassessment proceedings, the A.O. inter alia, made use of the provisions of the circular issued post assessment The assessee objected to this claiming that the said circular has no force. Discuss.
Question 4 (ID 04) (Revision / Home work)
R Bros., an AOP, had submitted its return of income on 31-7-AY showing an income of Rs. 47,200. No assessment was made on the return. Two of the members of the AOP had been assessed in respect of the share income from the AOP. In August of AY , the audit party points out of the Assessing Officer that R Bros. have claimed excessive depreciation of Rs. 3,000. The Assessing Officer has issued under section 148 on R Bros. seeking to assess the income of the AOP. Can this be done ?
Question 5 (ID 05)
An assessment was made on R originally in the status of a non-resident. In the re-assessment made under section 147, he is assessed as resident and ordinarily resident on the ground that the correct status was not disclosed in the return of income filed originally. Is the change of status valid in a re-ssessment ?
A non-resident individual was assessed originally on income arising in India on 8-3-2019 in respect of assessment year 2018-19. The Assessing Officer discovered an omission in the assessment and issued notice to the statutory agent on 10-12-2023 for re-assessment of the omitted income under section 147. Assuming that the statutory agent has been given notice of his appointment and has been heard u/s 163, how will he contest the validity of the re-assessment ?
An assessee filed a return showing, inter alia, a sum of Rs. 25,000 as capital receipt and hence not liable to tax. The Assessing Officer accepted the claim of the assessee and made the assessment on the income disclosed. Subsequently, a successor to the Assessing Officer came across a judgement of the high Court under which the amount claimed as exempt was held to be liable to tax, under identical circumstances. The assessment was re-opened under section 147. The assessee wants you to contend that the notice under section 147 is not valid. What is your opinion? (Revision / Home work)
Question 6 (ID 06)
Discuss the validity of the proceedings in the following cases.
An Assessing Officer made an order of assessment on R determining the total income at Rs. 3,75,000 by an order just 4 days before last date of making order in respect of year. This was served on the assesse after the 15 days of order. A tax of Rs. 1,87,500 was determined subsequently and a demand notice was served on the assesse after 25 days.
R Ltd. effected purchases of stock-in-trade of the value of Rs. 2,50,000 from G and Company during the year. Vouchers in support of the purchases were produced before the Assessing Officer, who accepted the claim. Subsequently, the Assessing Officer, received specific information that the said purchases were not genuine and G and Company had denied the transaction. The Assessing Officer thereafter re-opened the assessment under section 147. R. Ltd. challenges the validity of the re-assessment on the ground that it had disclosed all the primary facts and the Assessing Officer ought to have verified the genuineness of the claim at the time of the original assessment. (Revision / Home work)
Question 7 (ID 07)
Examine the validity of the following:
An assessee was treated as an agent of a non-resident in respect of year for which no return was filed suo moto. A notice under section 148 was, therefore, issued to him after 4 years from assessment year calling upon him to file a return of income. The assessee raised an objection stating that the proceedings were not valid. (Revision / Home work)
A firm consisting of partners R and G files a return of income in respect of the year showing a total income of Rs. 86,000. The Assessing Officer is, however, of the opinion that the business of the firm belongs to R as proprietor and makes and assessment on him. In the appeal filed by R the appellate authority holds that the firm is genuine and, therefore, allows the appeal. The Assessing Officer issues a notice under section 148 and to the firm to assess the income which has escaped assessment.
A firm was assessed under section 143(3) on a total income of Rs. 1,00,000 in respect of assessment year 2003-04 on 20-4-2004. The assessment was reopened to re-assess an income of Rs. 49,000 which had escaped assessment by issue of a notice under section 148 on 15-1-2006 and the re-assessment was completed on 20-3-2006. The assessment of the partner, whose case had also been reopened along with that of the firm, was made on 15-4-2008, in order to give effect to higher share of remuneration, consequent on reassessment of the firm
Question 8 (ID 08)
Ms. X, an Indian resident, owns for the financial year, a house property in London purchased in July 2004; a shop in Sydney purchased in June 2006 and space in a commercial complex in New York purchased in April 2012. She is also having authority to operate the bank account maintained with Citibank London of a company owned by her daughter and son-in-law since July 2013.
She has been served in July 2015 with the notices issued under section 148 for assessment years 2003-04 to 2014-15. She wants to challenge the action of the Assessing Officer for issuing notices under section 148 for multiple years, seeks your opinion. Advise her suitably.