Law:

Section:

Section 147, read with section 148 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 2005-06 - When tax payable as per reasons recorded was less than tax paid by assessee under assessment framed under section 143(3), question of any income having escaped assessment did not arise, and, consequently, reassessment proceeding was to be set aside [In favour of assessee] For the assessment year 2005-06, the assessee company filed its return of income under section 139(1) accompanied by a statement of total income, annual audited accounts and audit report. The income declared by the assessee as per the regular provisions of the Act was Rs. 1,57,073. However, since the tax payable on the said income was less than 7.5 per cent of the book profit as defined in section 115JB, income came to be determined under section 115JB at Rs. 63,06,232 and tax thereon, at 7.5 per cent being a sum of Rs. 4,72,967 was paid. The Assessing Officer selected the case for scrutiny and by, framed assessment under section 143(3). Subsequently, by the impugned notice, the assessment had been reopened on the ground that the income had escaped assessment as the assessee had claimed excess depreciation of Rs. 8,59,944. Held that according to the Assessing Officer, the income chargeable to tax that had escaped assessment by way of excess depreciation is Rs. 8,59,944. Adding the said amount to the amount computed under the ordinary provisions of the Income-tax Act, the aggregate amount even as per the Assessing Officer came to Rs. 4,05,930 which was less than the amount of tax paid by the assessee on being assessed under section 115JB. In the circumstances, when the tax payable as per the reasons recorded was less than the tax paid by the assessee under the assessment framed under section 143(3), the question of any income having escaped assessment did not arise. The order recording reasons itself indicated that in fact no income had escaped assessment and as such there was no basis for the formation of belief that income had escaped assessment. In the circumstances, the basic pre-condition for reopening the assessment under section 147, namely, that the Assessing…

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