Assessee can’t Challenge Jurisdiction of AO through Writ Petition If Not Objected Initiation of Re-Assessment: Madras HC [Read Judgment]

The Madras High Court has ruled that an assessee cannot challenge the jurisdiction of an assessing officer if objection against re-assessment is not initiated.

The assessee M/s Hanon Automotive Systems India Pvt. Ltd. had an income of Rs. 50,000 /- escape assessment. The Assessing Officer was of the view that “On scrutiny of records, it is revealed that as per Col.17(a) of Form 3CD audit report, capital expenditure debited Rs.14,16,73,150/- being development and testing charges. As per P&L a/c, total development and testing charges debited is Rs.22,53,57,511/-. The assessee did not add back the same in the Income Computation statement. Since capital expenditure is not an allowable expenditure, the same should be disallowed. “

With no objections from the assessee, the learned Assessing Authority had passed the order of re-assessment dated 7.12.2018 adding back the said Development and Testing Charges of Rs.22,53,57,511/- holding it to be a Capital Expenditure which was claimed as Revenue Expenditure by the Assessee in the Profit and Loss Account.

Aggrieved by the same, instead of filing regular Appeals before the Commissioner of Income Tax (Appeals), the Assessee filed the present writ petitions under Article 226 of the Constitution of India which, however, came to be dismissed by the learned Single Judge who held that “the Assessee, having not filed any objection before the Assessing Authority against initiation of re-assessment proceedings for the reasons for re-opening the Assessment, he was not entitled to question the jurisdiction of the Assessing Authority now and therefore, the writ petition was not maintainable and the Assessee ought to have filed regular Statutory Appeals under the provisions of the Act.”

The bench comprising of Justice Dr. Vineet Kothari and Justice C.V. Karthikeyan while upholding the verdict of the Single Judge held, “we are satisfied that the order of the learned Single Judge does not suffer from infirmity so as to call for any interference and the present appeals are devoid of merit and are liable to be dismissed.”

The High Court however allowed the assessee to file the regular Statutory Appeal within a period of two weeks from the date of judgement and ordered the same to be entertained without objection as to the period of limitation.