- (1.) The petitioners question the propriety of a notice dated March 31, 2014 issued under Section 148 of the Income Tax Act, 1961 for initiating proceedings for reassessment under Section 147 of the Act in respect of the assessment year 2007 -08. In response to the notice under Section 148 of the Act, the petitioning assessee, a well -known firm of chartered accountants, protested on May 19, 2014. The assessee also referred to a previous attempt at reassessment being arrested by an interim order of this Court.
(2.) The previous order of reassessment pertained to provident fund and the perceived failure of the assessee to deposit the employees' contribution to the appropriate authorities within time. Upon such attempt at reassessment being challenged by way of WP No.205 of 2013, this Court restrained any final order being communicated on the reassessment without the leave of Court. The matter is pending after filing of affidavits.
(3.) As far as the present attempt at reassessment is concerned, it pertains to the pension to an erstwhile partner of the petitioner firm. The petitioners claim that since the petitioners referred to the accounts being prepared on accrual basis in the notes appended to the accounts, in the tax audit report and elsewhere, following the introduction of Accounting Standard -15 pertaining to employees' benefits, the petitioning assessee was obliged to provide for the total amount that was to be paid to the relevant erstwhile partner, notwithstanding the actual payment not being made in the assessment year 2007 -08. The petitioners refer to the accounts for the relevant year and, in particular, to Form No.3CD appended to the accounts for the relevant year. Under Clause 18 in Form No.3CD, the petitioning assessee disclosed the particulars of payments made to the persons specified under Section 40A(2)(b) of the Act. The list of all relevant persons was also disclosed. It was clearly mentioned therein that P. M. Narielvala (since deceased) was an erstwhile partner of the petitioner firm and a sum of Rs.19,20,000/ - was shown to have accrued to the said erstwhile partner on account of pension.;