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Issues: Challenge to notice issued u/s 148 of Income-tax Act, 1961 for reassessment of income for assessment year 1987-88 based on failure to disclose material facts.
Summary: The petitioner challenged a notice issued u/s 148 of the Income-tax Act, 1961 for reassessment of income for the assessment year 1987-88, contending that the notice was time-barred as the assessee had not failed to disclose all material facts necessary for assessment during the original assessment proceedings. The law requires the Assessing Officer to have a reason to believe that income has escaped assessment due to the assessee's failure to disclose fully and truly all material facts before issuing a notice u/s 148. The reasons for initiating reassessment proceedings were disclosed to the assessee upon demand. However, upon examination, it was found that there was no indication of the assessing authority's satisfaction or belief that income had escaped assessment due to the assessee's failure to disclose necessary facts. There were no allegations of failure to file returns or provide particulars as required under section 147 for invoking jurisdiction after the four-year limit from the end of the relevant assessment year. Since the notice was issued in 1994, well beyond four years from the end of the assessment year 1987-88, and the conditions for invoking jurisdiction u/s 149 beyond four years were not met, the High Court held that the notice was without jurisdiction and quashed it. Any proceedings taken in pursuance of the notice were also deemed quashed. The petition was allowed, and the rule was made absolute with no order as to costs.
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