Standard Chartered Finance Ltd. vs Commissioner of Income Tax and Others

Leave granted. The matter is heard finally with the consent of the learned Counsel for the parties. The issue for consideration relates to the assessment year 1997-98 under the Interest-tax Act, 1974 (hereinafter referred to as "the Act"). The admitted facts are that on the return filed by the Appellant/assessee for this assessment year, no assessment order was passed. However, much after the last date of the assessment year is over, the Assessing Officer sought to reopen the assessment by issuing notice Under Section 10 of the Act and thereafter proceeded to reassess the interest chargeable under the aforesaid Act. The matter was carried in appeal by the Assessee. The main contention of the Assessee was that when there was no assessment order even passed in the original proceedings there was no question of reopening the so-called assessment and make the reassessment. The Commissioner of Income-tax (Appeals) accepted the aforesaid contention and set aside the reassessment order. This order was upheld by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") as well. However, in further appeal filed by the Revenue before the High Court, the High Court has reversed the view taken by the Tribunal holding that even if there was no original assessment order passed Under Section 10 of the Act, there could be reassessment. We may note that the Assessee had relied upon various judgments in support including the judgment of this Court in Trustees of H.E.H. the Nizam''s Supplemental Family Trust v. CIT , [2000] 242 ITR 381 (SC). The High Court has held that the said judgment would not govern the case at hand.

After hearing the Learned Counsel for the parties, we are of the opinion that the High Court has wrongly not acted upon the ratio laid down in Trustees of H.E.H. the Nizam''s Supplemental Family Trust''s case which squarely applies in the instant case in favour of the Assessee. The ratio of the said judgment is that in those situations where there is no assessment order passed, there cannot be a notice for reassessment inasmuch as the question of reassessment arises only when there is an assessment in the first instance. We, thus, allow this appeal and set aside the order passed by the High Court.