2011 (11) TMI 653 - AT - Income Tax

Summary

Issues involved: Reopening of assessment u/s 147 of the Income-tax Act, 1961.

Cross Objection by Assessee:
The original assessment u/s 143(3) was made, and later, notice u/s 148 was issued based on information received regarding accommodation entries. Assessee contended that the notice was without jurisdiction as there was no failure to disclose material facts. The ld. CIT (Appeals) upheld the reopening, stating that the assessing officer need not prove escapement of income at the time of reopening. Assessee argued that notice issued after four years is barred by limitation. The High Court held that failure to disclose material facts is a pre-condition for invoking jurisdiction u/s 147, and as such, the reopening without such reasons is bad in law.

Arguments and Decision:
The assessing officer did not record satisfaction of failure to disclose material facts, as required by law. High Court precedents were cited to support the contention that the absence of such a finding renders the reopening and subsequent assessment without jurisdiction. The High Court decisions emphasized the importance of fulfilling the pre-conditions for invoking section 147, and in this case, the absence of such reasons led to the quashing of the reassessment.

Conclusion:
The High Court ruled in favor of the assessee, annulling the assessment and dismissing the Revenue's appeal as infructuous. The decision was pronounced on 18th November, 2011.