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2010 (5) TMI 438 - HC - Income TaxReassessment notice beyond 4 years - failure on the part of the assessee to disclose all material facts necessary for the assessment - assessee furnished complete details relating to the sale of equity shares - notice issued beyond four years barred by limitation - petition allowed
Issues:
Validity of notice under section 148 of the Income-tax Act, 1961 and initiation of proceedings under sections 147 for assessment year 2001-02. Analysis: The petitioner challenged the validity of the notice under section 148 of the Income-tax Act, 1961, issued beyond the four-year period for the assessment year 2001-02. The petitioner had filed returns disclosing income from the sale of equity shares through a stockbroker. The assessing authority had accepted the claim after detailed verification. Subsequently, a search and seizure operation at the stockbroker's premises led to the discovery of alleged fictitious transactions, prompting the assessing authority to issue a notice under section 148 based on the stockbroker's statement. The petitioner argued that there was no failure to disclose material facts and that the notice was time-barred. The High Court analyzed the provisions of section 147 of the Act, which allow for reassessment if income has escaped assessment due to the assessee's failure to disclose material facts. The Court noted that the petitioner had provided complete details regarding the equity shares transaction, and the assessing authority had conducted a thorough inquiry based on the furnished information. As there was no failure on the part of the assessee to disclose material facts, the Court held that the notice issued beyond the four-year period was barred by limitation. The Court found that the notice under section 148 of the Act, issued on May 11, 2006, was beyond the statutory limitation period and thus quashed the notice and consequential proceedings. Therefore, the Court allowed the writ petition, quashing the notice dated May 11, 2006, under section 148 of the Act and the subsequent proceedings initiated under sections 147 for the assessment year 2001-02.
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