2004 (9) TMI 596 - AT - Income Tax

Summary

Issues:
Validity of notice under section 147/148 for reopening assessment after expiry of four years from the end of relevant assessment year.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai concerned the validity of a notice issued under section 147/148 of the Income-tax Act to reopen an assessment after the expiry of four years from the relevant assessment year. The original return of income was accepted by the Assessing Officer, but a notice was issued under section 147/148 leading to a revised assessment. The CIT(A) quashed the notice, emphasizing the requirement of the assessee to disclose all material facts necessary for assessment. The Department challenged this decision, arguing that the assessee did not fully disclose all relevant facts during the original assessment. The Tribunal referred to legal precedents emphasizing the obligation of the assessee to disclose fully and truly all material facts necessary for assessment. It highlighted that mere production of account books or evidence does not suffice for disclosure. The Tribunal cited the Supreme Court's decision in Kantamani Venkata Narayana & Sons v. Addl. ITO, emphasizing the need for the assessee to point out specific relevant facts to the Assessing Officer. Additionally, the Tribunal referenced the case of Indo-Aden Salt Mfg. & Trading Co. (P.) Ltd. v. CIT, which clarified that the assessee's duty is to disclose primary facts, not inferential facts, and that a false or partial disclosure is inadequate. The Tribunal underscored the requirement for full and true disclosure of all material facts necessary for assessment, as established in Sri Krishna (P.) Ltd. v. ITO. Ultimately, the Tribunal held that the CIT(A) did not adequately evaluate whether the assessee had disclosed all relevant facts, leading to the decision to vacate the order and remand the matter for a fresh decision after identifying the relevant facts for assessment and assessing the adequacy of the assessee's disclosure.

In conclusion, the appeal filed by the Department was allowed by the Appellate Tribunal ITAT Mumbai, emphasizing the obligation of the assessee to disclose fully and truly all material facts necessary for assessment and the need for a comprehensive evaluation of the disclosed facts to determine compliance with this requirement.