2003 (2) TMI 14 - HC - Income Tax

Notice u/s 148 limitation - the assessment is sought to be reopened after four years - since the conditions set out in section 147 of the Income-tax Act are not fulfilled, the notice issued for reopening the assessment must be held to be invalid and without jurisdiction consequently, plea of the Revenue that the petition suffers from delay and laches cannot be sustained.

Summary

Issues:
Challenge to notice under section 148 of the Income-tax Act for assessment year 1994-95 beyond the four-year period.

Detailed Analysis:
The petitioner challenged the notice issued under section 148 of the Income-tax Act for the assessment year 1994-95, beyond the four-year period, along with the notice of hearing under section 143(2) of the Income-tax Act. The petitioner contended that the notice issued beyond the four-year period from the end of the assessment year 1994-95 lacked jurisdiction and should be quashed. The petitioner, a private limited company providing consultancy services to a Russian Government-owned company, had claimed a deduction under section 80-O of the Income-tax Act for consultancy charges received. The original assessment order disallowed the deduction, but on appeal, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to allow the deduction under certain conditions. The Assessing Officer subsequently allowed the claim. However, a notice was issued under section 148 of the Income-tax Act to reopen the assessment for the same year, citing excess relief granted as the reason.

The respondents disclosed the reasons for reopening the assessment, stating that deduction under section 80-O for services rendered in the financial year 1990-91 would not be available in the assessment year 1994-95. The petitioner argued that the deduction was rightfully allowed, and there was no failure to disclose material facts. The Revenue contended that the delay in approaching the court was unreasonable and that the reasons for reopening the assessment were valid. The court examined the reasons for reopening the assessment and the original assessment order, finding that there was no failure on the part of the petitioner to disclose material facts. The court noted that the deduction under section 80-O was allowed knowingly, and the reasons for reopening were the same as those for disallowing the claim initially.

The court held that since there was no failure to disclose material facts, the notice issued for reopening the assessment was invalid and without jurisdiction. The court quashed the impugned notices and ruled in favor of the petitioner, rejecting the Revenue's argument of delay and laches. The court concluded that the notice was without jurisdiction, and the petition succeeded.

Conclusion:
The court ruled in favor of the petitioner, quashing the notice issued under section 148 of the Income-tax Act for the assessment year 1994-95 beyond the four-year period. The court found that there was no failure on the part of the petitioner to disclose material facts, making the notice invalid and without jurisdiction. The court rejected the Revenue's argument of delay and laches, holding that the notice was not sustainable.