2013 (3) TMI 645 - HC - Income Tax

Reopening of assessment - Held that - In the facts of the present case, it is an undisputed position that there is no failure on the part of the assessee insofar as the first condition is concerned. Insofar as the second condition, viz. failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment is concerned, on a plain reading of the reasons recorded, it is apparent that the same are totally silent as regards any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the relevant assessment years. In absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment years under consideration, the notice under section 148 of the Act having been issued after the expiry of a period of four years from the end of the relevant assessment years, the very initiation of proceedings under section 147 of the Act stand vitiated and as such cannot be sustained. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income-tax Act, 1961 for Assessment Year 2005-2006.

Analysis:
The petitioner challenged a notice issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2005-2006. The petitioner, engaged in renovation and modernization of transmission lines, contended that the notice was invalid as it was issued beyond the four-year period from the end of the relevant assessment year. The petitioner argued that the notice was based on a retrospective amendment to Section 80-IA of the Act, which did not indicate any failure on their part to disclose material facts necessary for assessment.

The respondent, on the other hand, argued that the notice was valid due to the amendment of Section 80-IA with retrospective effect, implying that the petitioner had not provided true facts during the original assessment. However, it was undisputed that there was no failure on the part of the petitioner to disclose all material facts relevant for assessment. The court noted that the reasons recorded for reopening the assessment were solely based on the disallowance of deduction under Section 80-IA due to the nature of the petitioner's business, without any indication of failure to disclose material facts.

The court emphasized that for Section 147 to be invoked after the four-year period, there must be a failure on the part of the assessee to disclose all material facts necessary for assessment. Since there was no such failure in this case, and the notice was issued beyond the prescribed period, the initiation of proceedings under Section 147 was deemed invalid. Consequently, the court allowed the writ petition and quashed the impugned notice dated 13.1.2012 issued under Section 148 of the Income Tax Act, 1961.