2013 (7) TMI 769 - HC - Income Tax

Reopening of assessment u/s 148 - whether the conditions precedent for exercise of powers u/s 147 in the light of the proviso thereto are satisfied - The only aspect which is required to be considered is as to whether the provisions of section 150 of the Act would be attracted - the ingredients for invoking section 150 are clearly not satisfied basic premise on which the assessment is sought to be reopened is erroneous the very formation of belief that income chargeable to tax has escaped assessment is fallacious and there is no material on the basis of which the AO could have formed such a belief - there is no material on record to indicate any omission or failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment - neither of the two conditions precedent for exercise of powers u/s 147 after the expiry of a period of four years from the end of the relevant A.Y. is satisfied - the very assumption of jurisdiction on the part of the Assessing Officer is invalid notice set aside petition allowed in favour of assessee.

Summary

Issues:
1. Validity of notice issued under section 148 of the Income-tax Act, 1961 for reopening assessment for the assessment year 1989-90 beyond the prescribed time limit.

Analysis:
The petitioner challenged the notice dated December 12, 2000, issued by the respondent under section 148 of the Income-tax Act, 1961, for reopening the assessment for the assessment year 1989-90. The petitioner contended that the notice was beyond the four-year time limit from the end of the relevant assessment year and lacked the necessary grounds for jurisdiction. The respondent argued that the notice was valid under section 150 of the Act to give effect to the order of the Commissioner (Appeals).

The court examined the provisions of section 150 of the Act, which allow a notice under section 148 to be issued at any time to make an assessment in consequence of or to give effect to any finding in an appellate order. The reasons recorded by the Assessing Officer indicated that the assessment was reopened due to potential income escapement, not solely to comply with the Commissioner (Appeals) order. The court found that the Assessing Officer was effectively challenging the Commissioner (Appeals) decision by reopening the assessment, which was not the intent of section 150. The court concluded that the conditions for invoking section 150 were not met, and the reopening of the assessment was time-barred.

The court held that there was no valid belief that income had escaped assessment, and no failure on the petitioner's part to disclose material facts. Therefore, the assumption of jurisdiction by the Assessing Officer was deemed invalid. Consequently, the court allowed the petition, quashed the impugned notice dated December 12, 2000, and set it aside, ruling in favor of the petitioner.

In summary, the judgment focused on the validity of the notice issued under section 148 of the Income-tax Act, 1961, for reopening the assessment beyond the prescribed time limit. The court analyzed the provisions of section 150 and the reasons recorded by the Assessing Officer, ultimately determining that the reopening of the assessment was unjustified and time-barred. The court ruled in favor of the petitioner, quashing the notice and setting it aside.