2012 (7) TMI 597 - HC - Income Tax

Reopen the assessment u/s 147 - the petitioner has not fulfilled the conditions laid down by the amended provisions of section 80HHC - Held that - On plain reading of the reasons recorded it is evident that there is not even a whisper to suggest that there is any failure on the part of the petitioner to disclose fully and truly all material facts - when the petitioner filed its return of income, the amended provisions of section 80HHC had not been brought on the statute book and the law requires the assessee to file returns in accordance with the existing laws, and does not and cannot expect the assessee to anticipate any future amendments made in the enactment and file its return accordingly - when the amended provisions of section 80HHC of the Act were not in existence at the relevant time when the return came to be filed, no such failure can be attributed to the assessee - in favour of assessee.

Summary

Issues:
Challenge to notice under section 148 of the Income Tax Act, 1961 for reopening assessment of the petitioner for the assessment year 2000-01.

Analysis:
The petitioner, a public limited company, filed its return of income for the assessment year 2000-01, declaring an income and claiming deduction under section 80HHC of the Act. The assessment was framed under section 143(3) of the Act, wherein the deduction under section 80HHC was not granted on income from DEPB licences. The Commissioner (Appeals) partly allowed the appeal by permitting the claim for deduction under section 80HHC. Subsequently, the respondent sought to reopen the assessment through a notice dated 30th March 2007, which was challenged by the petitioner. The petitioner argued that the notice was issued beyond the prescribed period and without any failure to disclose material facts. The petitioner contended that the basis for reopening was a subsequent amendment to section 80HHC, which was not in existence when the return was filed. The petitioner relied on a previous court decision to support their argument.

The respondent, on the other hand, supported the notice and stated that the petitioner failed to disclose all material facts as per the amended provisions of section 80HHC. The respondent argued that the assumption of jurisdiction by the Assessing Officer was legal and valid. The court examined the reasons recorded by the Assessing Officer for reopening the assessment, which highlighted the amendment to section 80HHC and the conditions for claiming deductions under it. The court noted that there was no assertion of failure to disclose material facts in the reasons recorded, and the basis for reopening was to verify compliance with the amended provisions of section 80HHC.

The court emphasized that the requirement for reopening an assessment after the prescribed period is the escapement of income due to a failure to disclose all material facts. It was observed that the petitioner could not have foreseen the amendment to section 80HHC at the time of filing the return, and therefore, no failure to disclose material facts could be attributed to the petitioner. The court relied on a previous decision to support this reasoning and concluded that the impugned notice was unsustainable as it did not meet the basic requirement for reopening the assessment. Consequently, the court quashed and set aside the notice dated 30th March 2007 issued under section 148 of the Act, ruling in favor of the petitioner.