2013 (8) TMI 77 - HC - Income Tax

Notice u/s 148 - A.O. rejected assessee's objection to notice of reassessment - Held that - impugned notice has been issued beyond a period of four years from the end of relevant assessment year - neither any order rejecting the petitioner's objection nor Revenue contends that the belief of the Assessing Officer that income chargeable to tax has escaped assessment, is based on any material outside of the record - full facts were there before the Assessing Officer in the form of declarations made in the returns filed as well as through correspondence during the course of scrutiny assessment. This therefore, is not a case where the assessee is stated to have failed to disclose truly and fully all material Acts necessary for assessment - Decided in favour of assessee.

Summary

Issues:
1. Challenge to notice seeking to reopen assessment year 2006-2007 under section 148 of the Income-tax Act, 1961.
2. Objections raised by the petitioner against the notice for reopening assessment.
3. Assessment Officer's objection to the petitioner's claim of bad debt not satisfying the requirements of section 36(1)(vii) of the Act.
4. Determining whether there was a failure on the part of the assessee to disclose all necessary facts for assessment.
5. Analysis of the material on the basis of which the reasons for reopening assessment were recorded.
6. Reviewing the statements made by the assessee during the original scrutiny assessment.
7. Assessment of whether the assessee failed to disclose truly and fully all material facts necessary for assessment.

The judgment involves a challenge to a notice dated 10-2-2012 seeking to reopen the assessment year 2006-2007 under section 148 of the Income-tax Act, 1961. The petitioner had claimed bad debts of Rs. 90,879 in its profit and loss account, but the Assessing Officer noted that Rs. 9,42,126 had been claimed and reduced from taxable profit without passing through the books of account. The objections raised by the petitioner were rejected, leading to the petition. The Assessing Officer's objection was that the claimed sum did not satisfy the requirements of section 36(1)(vii) of the Act. The High Court noted that the impugned notice was issued beyond four years from the relevant assessment year, requiring an examination of whether there was a failure to disclose necessary facts for assessment. The court found that the material forming the basis of the reasons for reopening assessment was part of the original record, and the belief of the Assessing Officer was not based on any external material. The court also considered the statements made by the assessee during the original scrutiny assessment, concluding that all necessary facts were disclosed, and there was no failure to disclose material facts. As a result, the court quashed the impugned notice dated 10-2-2012, thereby disposing of the petition.