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2013 (3) TMI 35 - HC - Income TaxReopening of assessment - addition of Rs 77 lakhs receive from other companies on account of amount having allegedly escaped assessment - Held that - On going through the purported reasons there is no mention of the respondent-assessee not having made a full and true disclosure of the material facts necessary for assessment. On the contrary the purported reasons indicate that the amounts mentioned therein had been shown in the books of accounts as receipts from the companies mentioned therein. Also to note that at serial No.5 of the list of companies from which amounts have been allegedly received, the name of the assessee has been shown. This means that the assessee received the received money from itself, which can hardly be an allegation in this case. Thus the Tribunal has approached the matter in the correct perspective and has held the issuance of the notice under Section 148 to be bad in law and need to be set aside - in favour of assessee.
Issues Involved:
1. Jurisdiction of the Assessing Officer to issue notice under Section 148 of the Income Tax Act, 1961. 2. Validity of re-opening the assessment under Section 147 of the Income Tax Act, 1961. 3. Merits of the addition of Rs. 77 lakhs to the respondent-assessee's income. Issue-wise Detailed Analysis: 1. Jurisdiction of the Assessing Officer to Issue Notice under Section 148: The primary contention was whether the Assessing Officer had jurisdiction to issue a notice under Section 148 for re-opening the assessment for the assessment year 2002-03. The notice was issued on 30.07.2007, beyond the period of four years. According to the Proviso to Section 147, one of the pre-conditions for invoking this section is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The respondent-assessee argued that this pre-condition was not satisfied, and there was no mention of any failure to disclose material facts in the recorded reasons. The Tribunal found that the reasons did not indicate any failure on the part of the assessee to disclose material facts, thereby making the issuance of the notice under Section 148 invalid. 2. Validity of Re-opening the Assessment under Section 147: The Tribunal followed precedents set by this Court in "Wel Inter Trade P. Ltd. & Anr. vs. ITO: 308 ITR 22 (Del.)" and "Haryana Acrylic Manufacturing Company vs. CIT & Anr.: 308 ITR 38," which held that in the absence of any allegation of failure to disclose material facts, the Assessing Officer cannot re-open an assessment. The Tribunal noted that the purported reasons for re-opening did not contain any allegations of non-disclosure by the assessee. Thus, the re-opening of the assessment was deemed invalid. 3. Merits of the Addition of Rs. 77 Lakhs: The Commissioner of Income Tax (Appeals) had deleted the addition of Rs. 77 lakhs on merits, but the Revenue appealed this decision. However, since the Tribunal found the re-opening of the assessment itself to be invalid, it did not examine the merits of the addition. The High Court supported this approach, indicating that the invalidity of the notice under Section 148 rendered all subsequent proceedings void. Conclusion: The High Court upheld the Tribunal's decision that the issuance of the notice under Section 148 was invalid due to the lack of any indication that the assessee failed to disclose material facts necessary for the assessment. Consequently, all proceedings based on this notice, including the re-assessment and the addition of Rs. 77 lakhs, were quashed. The appeal by the Revenue was dismissed, affirming that no substantial question of law arose for consideration.
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