2014 (3) TMI 223 - HC - Income Tax

Validity of Notice issued u/s 148 of the Act Opportunity of being heard Held that - The Assessing Officer would have had ample occasion to consider and detect all the material disclosed by the petitioner during proceedings under Section 143(3) of the Act - Besides, from the reasons recorded for reopening of the assessment, it is very clear that the same has been issued on examination of the computation of the income and details furnished under Section 44AB of the Act - it cannot be said that there was a failure on the part of the petitioner to disclose material facts necessary for assessment proceeding during the original proceedings leading to the Assessment Order dated 21 April 2008 - there has been no failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment during the original assessment proceeding leading to Assessment Order dated 21 April 2008 - Thus, the notice dated 22 March 2013 is unsustainable. There is no occasion to consider the petitioner s other contention that there is no reason to believe that income chargeable to tax has escaped assessment as the present proceeding initiated by the impugned notice dated 22 March 2013 is mere change of opinion thus, the notice dated 22 March 2013 is an order without jurisdiction - the requirement of the first proviso to Section 147 of the Act is not satisfied thus, the notice dated 22 March 2013 issued under Section 148 of the Act is set aside Decided in favour of Assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for Assessment Year 2006-07.

Analysis:
1. The petitioner challenged the notice dated 22 March 2013 issued under Section 148 of the Income Tax Act, seeking to reopen the assessment for the Assessment Year 2006-07. The petitioner contended that all facts forming the basis of reopening were disclosed during the original assessment proceedings. The petitioner argued that the notice lacked jurisdiction as there was no failure to disclose necessary facts for assessment.

2. The Assessing Officer, in response to the petitioner's objections, rejected them on the grounds that the petitioner failed to disclose all material facts, which were detected only through further scrutiny. The Assessing Officer did not address the petitioner's argument regarding the absence of fresh tangible material for reassessment. The petitioner's objections were dismissed based on the failure to make a full and true disclosure of all material facts.

3. The petitioner's counsel argued that the notice was without jurisdiction as the reasons indicated an error regarding the computation of income. It was contended that all details were furnished during the original assessment proceedings, and the notice was issued based on a mere change of opinion. The petitioner maintained that there was no failure to disclose material facts necessary for assessment.

4. The respondent supported the notice and rejection of objections, asserting that there was a failure to fully and truly disclose all material facts. The respondent contended that the reassessment would examine the disallowed expenditures, and the petitioner's explanations would be considered during the process.

5. The High Court found that the notice was issued beyond the normal period and that there was no failure on the petitioner's part to disclose all material facts during the original assessment. The Court concluded that the reasons for reopening were based on facts already on record and that the notice lacked jurisdiction. Therefore, the notice dated 22 March 2013 under Section 148 of the Act was quashed, and the Assessing Officer's order rejecting objections was set aside.