2010 (5) TMI 641 - HC - Income Tax

Exemption under section 10B - jurisdiction income escaped assessment - notice u/s 147/148- Deduction under section 10B - exemption had also been granted, Section 10B was thereafter amended - claimed exemption under section 10B contending that the same was not in respect of the same unit but in respect of a new unit - held that - neither annexure A, nor enclosure I disclosed the fact that admittedly the exemption claimed by the ferromet concentrates division under section 10B had been granted and availed of by the petitioner. It is a moot point as to whether in view of the failure to mention the same, the disclosure can be said to be a true disclosure even assuming that all the facts pertaining to the setting up of the alleged new unit were disclosed. - Writ petition dismissed.

Issues Involved:
1. Reopening of assessment under Section 147 and issuance of notice under Section 148.
2. Jurisdiction of the Assessing Officer to issue the notice.
3. Failure to disclose fully and truly all material facts.
4. Validity and maintainability of the writ petition.

Detailed Analysis:

1. Reopening of assessment under Section 147 and issuance of notice under Section 148:

The petitioner challenged the reopening of its assessment for the assessment year 2002-03. The original assessment was completed on March 31, 2005, under Section 143(3). The petitioner had claimed exemption under Section 10B for a new unit, which was disputed by the Department, arguing that it was merely an expansion of an existing unit. A notice dated April 1, 2008, was issued under Section 148, stating that the respondent had reason to believe that the petitioner's income chargeable to tax had escaped assessment within the meaning of Section 147.

2. Jurisdiction of the Assessing Officer to issue the notice:

The petitioner contended that the notice under Section 148 was issued without proper jurisdiction and after the expiry of four years from the end of the relevant assessment year. They relied on the judgment in Hindustan Lever Ltd. v. R. B. Wadkar, which emphasized that the reasons for reopening must be recorded clearly and unambiguously by the Assessing Officer, and no action can be taken under Section 147 after four years unless there was a failure to disclose fully and truly all material facts.

3. Failure to disclose fully and truly all material facts:

The petitioner argued that all necessary information was provided during the original assessment, and there was no failure to disclose material facts. The court noted that the term "fully and truly" indicates that a full disclosure is not sufficient; it must also be true. The court referred to the Supreme Court's decision in Kantamani Venkata Narayana and Sons v. First Addl. ITO, which held that the duty to disclose all material facts is not discharged merely by producing books of account; the assessee must bring relevant items to the notice of the Income-tax Officer.

4. Validity and maintainability of the writ petition:

The court acknowledged that the writ petition is maintainable but opined that the issues raised would be more conveniently decided in an appeal under the Income-tax Act rather than in a writ petition. The court did not express any opinion on the validity of the impugned order and kept all contentions open for consideration in the appeal process.

Conclusion:

The writ petition was dismissed, with the court directing that all contentions could be raised in an appeal under the Income-tax Act. The interim order was extended up to August 16, 2010. The court emphasized the importance of fully and truly disclosing all material facts and the necessity of clear and unambiguous reasons for reopening assessments.

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