Economy

Reassessment to withdraw certified relief

In The Hindu dated April 5, 2010, you have referred to reassessment jurisdiction. But it does not deal with one of the most frequent reasons for such notice for reassessment or recomputation to withdraw a certified relief for incentives under Chapter VI-A. A certificate from a chartered accountant should ordinarily be capable of being questioned only in a regular assessment and it should not be possible to question it by inferring understatement of income in a return claiming deduction on the basis of certified relief. Is not such an inference reasonable?

What is certified as eligible profits by a qualified chartered accountant under the terms of the statutory provisions should ordinarily be acceptable. A taxpayer, not being normally literate in the complexities of tax laws, can do no better than act upon the prescribed certificate. Granting that the assessing officer has the right to vet the same, it should ordinarily be done in a scrutiny assessment. Where no scrutiny notice is issued, the assessee should be entitled to peace in respect of certified relief. It should certainly not be possible to withdraw the relief beyond the four-year time limit, even in a case where no scrutiny notice was issued. Even where the notice is issued within the four-year time limit, there is scope for the view that the notice is not based on any information but is merely intended for checking the correctness of the claim. Reassessment or recomputation powers are not meant for this purpose.

Where an assessment has been made after scrutiny, the question of reassessment cannot arise at all, since the assessing officer had the opportunity to question computation, which he did not. One of the many precedents on the subject for this view is in CIT v Hindustan Tools and Forgings P. Ltd. (2009) 306 ITR 209 (P&H).

There is an interesting observation of a High Court in respect of a matter of penalty levied for a wrong claim for relief based on an auditor's certificate.

The High Court in CIT v Deep Tools Pvt. Ltd. (2005) 274 ITR 603 (P&H) observed that there is no vulnerability for penalty for a wrong claim only in the absence of proof of collusion between the auditor and the assessee.

The same reasoning should apply in respect of reassessment jurisdiction as well.

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Printable version | Apr 7, 2020 6:34:26 AM | https://www.thehindu.com/business/Economy/Reassessment-to-withdraw-certified-relief/article16372495.ece

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