Kerala High Court: Assessing Authority Cannot Reassess Prior Years Without Inquiry While Determining Relevant Year’s Assessment [Income Tax]

The Kerala High Court in the case of Kings Infra Ventures Ltd. V. The Assistant Commissioner of Income tax observed and has stated that while determining the assessment of relevant years assessing authority cannot determine the assessment for earlier years without enquiry.

The Division bench comprising of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. was hearing the present matter.

The bench in the case observed that, “This court fail to understand how the assessing authority, as well as the First Appellate Authority, while considering assessment proceedings for the assessment years 2011-12 could have embarked upon an enquiry with regard to the nature and extent of business that was carried on by the assessee during the assessment years from 1999-2000 to 2009-10.’

In the present case, the Assessee or appellant filed a nil income tax return for the 2011-12 assessment year, wherein he claimed a carried-forward loss of Rs. 1,52,76,459/- which included unabsorbed depreciation from prior years, 1996-97 to 2009-10.

The Assessing Authority in the case disallowed 35,85,037 from this claim, assessing it under Section 143(3) of the Income tax Act.

The assessee filed an appeal to the First Appellate Authority which allowed part of the claim, permitting set-off of unabsorbed depreciation from 1996-97 and 1997-98 against income in 2010-11, 2011-12, and later years, but disallowed depreciation from 1998-99 to 2009-10 against income post 2012-13.

Therefore, the assessee filed an appeal before the Appellate Tribunal which confirmed the findings of the First Appellate Authority. The assessee has challenged the order passed by the Appellate Tribunal before the Kerala High Court.

The bench in the case observed and has noted that the findings of First Appellate Authority virtually tantamount to reopening the assessments for the assessment years 1999-2000 to 2009-10 without even going into the issue as to whether or not the claim for depreciation, as also set-off of unabsorbed depreciation, made by the assessee in its returns filed during the said years were accepted by the department or not. The bench while considering the facts and circumstances of the case stated that without determining the fate of the assessments made on the assessee during the assessment years 1999-2000 to 2009-10, the issue of allowance of a claim for depreciation on a claim for set-off of unabsorbed depreciation of earlier years could not have been gone into, or any directions given in regard thereto, by the First Appellate Authority.

Accordingly, the bench allowed the appeal.

The counsel, Abraham Joseph Markos appeared for the Appellant or Assessee.

The Counsel, Jose Joseph represent the Respondent or Department.

Source: The Business Guardian