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2012 (2) TMI 85 - HC - Income TaxReasons to believe under 147 - Provisions other than ascertained liabilities not added while computing Book profit under 115JB - Invoking 148 after 4 years requires failure on part of assessee to disclose all material fact - Held That - When there was no such failure on part of assessee revocation under 148 not justified.
Issues:
Challenge to notice under Section 148 of the Income Tax Act for reopening assessment beyond the four-year period from the relevant assessment year. Analysis: The petitioner challenged a notice issued under Section 148 of the Income Tax Act for reopening the assessment for Assessment Year 2004-05, which was beyond the permissible four-year period. The reasons for reopening included the failure to add certain amounts to the book profit, leading to an alleged income escape of Rs. 1.80 crores. The petitioner argued that the reasons provided did not state a failure to disclose all material facts, a prerequisite for reopening assessments beyond four years. Additionally, the retrospective amendment of law by Parliament regarding the diminution in the value of investment was highlighted, indicating that mere income escape due to amended provisions does not justify reopening beyond the four-year limit. The Revenue relied on the Assessing Officer's order dismissing objections to the reopening, emphasizing that the mere production of books of account does not imply full disclosure of material facts. However, the court found that the reasons for reopening lacked any mention of the assessee's failure to fully disclose material facts, as required by the proviso to Section 147. The retrospective amendment regarding the diminution in the value of investment and the disallowance of business development expenditure further supported the petitioner's argument that there was no failure to disclose material facts. The court concluded that the basis for reopening the assessment was contrary to law, leading to the quashing of the notice dated March 8, 2011. No costs were awarded in this ruling.
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