2008 (7) TMI 1011 - HC - Income Tax

Validity of reopening of assessment u/s 147/148, earlier framed u/s 143(3), after expiry of four years from end of relevant AY - granted excess deduction u/s. 80-I - HELD THAT - We are of the view that there is no omission or failure on the part of the assessee to disclose all material facts truly and fully. The assessments for both the years have been completed under sub-s. (3) of s. 143 of the Act. All necessary details were made available with the AO at the time of finalizing the regular assessment pursuant to the notices issued under ss. 143(3) (sic.), 142(1) as well as s. 143(2) of the Act and on that basis, assessments were finalized. Hence, it cannot be said that there was any omission or failure on the part of the assessee to disclose all material facts truly and fully at the time of original assessment. Even a bare perusal of the reasons recorded makes it clear that the factual data was available with the AO at the time of assessment. On these very materials, if he takes a different view subsequently, that too, after expiry of four year's period from the end of relevant assessment years, that would not confer any jurisdiction upon the respondent to issue notices u/s. 148 of the Act. Therefore, we are of the view that the impugned notices issued by the AO are without jurisdiction, more particularly when the notices are issued after a period of four years from the end of the relevant assessment years. Therefore, both the impugned notices are quashed. This petition is allowed. Rule is made absolute without any order as to costs.

Summary

Issues:
Challenge to notice for reopening of assessment under s. 147 r/w s. 148 of the IT Act for asst. yr. 1993-94 and 1992-93.

Analysis:
The petitioner, a company, filed a petition challenging the notice for reopening of assessment for the mentioned assessment years. The petitioner contended that the impugned notices were issued after the expiry of the four-year period from the end of the relevant assessment years. The petitioner requested the reasons recorded prior to the issuance of notices but did not receive them. The petitioner argued that the notices were illegal and contrary to law as there was no failure on their part to disclose all material facts necessary for assessment. The petitioner relied on the proviso to s. 147 of the Act, which states that no action can be taken after four years from the end of the relevant assessment year if the assessee has fully disclosed all material facts. The petitioner emphasized that the impugned notices lacked jurisdiction and should be quashed.

The learned advocate for the petitioner argued that both the High Court and the apex Court have consistently held that if there is no failure on the part of the assessee to disclose all material facts and if notices are issued beyond the four-year period from the end of the relevant year, such notices are invalid. The advocate highlighted that the impugned notices in this case were issued beyond the statutory limitation period and, therefore, should be set aside. On the other hand, the senior standing counsel for the Revenue contended that the case fell within the ambit of s. 147 of the Act as there were instances of underassessment and excessive deductions in the assessment.

After hearing both sides and examining the facts, the Court found that there was no omission or failure on the part of the assessee to disclose all material facts fully and truly during the original assessments. The Court noted that all necessary details were provided to the Assessing Officer during the assessments conducted under various sections of the Act. The Court emphasized that if the Assessing Officer takes a different view after the four-year period from the relevant assessment years, it does not grant jurisdiction to issue notices under s. 148 of the Act. Considering the case law and statutory provisions, the Court concluded that the impugned notices were without jurisdiction as they were issued after the four-year period. Consequently, the Court quashed both notices and allowed the petition, making the rule absolute without costs.