2004 (2) TMI 42 - HC - Income Tax

Notice under section 148 petitioner submits that the disclosure of reasons would make it clear that no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for that assessment year has been alleged as such the notice is hit by the proviso to section 147 and the same being beyond the period of four years from the end of the assessment year is unsustainable in law much less the same is without jurisdiction. We find that the submission made is well sustainable. -we quash and set aside the notice dated September 23, 2002, issued under section 148 of the Act holding it to be without jurisdiction.

Summary

Issues involved:
Challenge to notice under section 148 of the Income-tax Act, 1961 for reopening assessment for the assessment year 1997-98.

Detailed Analysis:

1. Background and Previous Judgment:
The judgment discusses a writ petition challenging a notice issued under section 148 of the Income-tax Act, 1961 for reopening the assessment for the assessment year 1997-98. The court refers to a previous judgment regarding a similar notice for the assessment year 1996-97, emphasizing the necessity of recording reasons for reopening assessments beyond four years.

2. Facts of the Case:
The petitioners filed their return of income for the assessment year 1997-98, declaring a total income and providing detailed information regarding the treatment of stamp duty paid during an amalgamation. Respondent No.2 raised queries regarding the allowability of the expenditure incurred through stamp duty, which the petitioner explained in detail.

3. Notice under Section 148:
Respondent No.1 issued a notice under section 148, alleging that the petitioner's income for the assessment year 1997-98 had escaped assessment. The petitioner requested the reasons for the notice, but they were not provided, leading to the filing of a writ petition under article 226 of the Constitution of India to challenge the notice.

4. Reasons Recorded by Respondent:
Upon being noticed, the respondents disclosed the reasons recorded prior to the issuance of the notice under section 148. The reasons highlighted discrepancies in the treatment of stamp duty as revenue expenditure, citing judgments from various high courts and the Supreme Court to support their position.

5. Court's Decision:
The court analyzed the reasons recorded and found that there was no failure on the part of the petitioner to disclose all material facts necessary for assessment. As a result, the court held that the notice under section 148 was without jurisdiction and unsustainable in law. The court quashed and set aside the notice, ruling in favor of the petitioner.

6. Conclusion:
The court allowed the petition, making the rule absolute with no order as to costs. The judgment reiterated the importance of recording proper reasons for reopening assessments and upheld the petitioner's challenge against the notice under section 148 for the assessment year 1997-98.