2014 (11) TMI 188 - HC - Income Tax

Reopening of assessment u/s 147/148 Notice issued beyond four years - Held that - The reasons recorded do not even allege that there has been any failure on the part of the assessee to make a full and true disclosure of the particulars necessary for making the assessment - there is no non-disclosure as the assessee had made it clear in the computation of income that the rate of tax applicable was 15% in view of the Article 11(2) of the India-Australia Double Tax Avoidance Treaty - the rate of tax more beneficial to the assessee would have to be applied - The rate of 15% was accepted by the AO AO has considered this aspect of the matter and such consideration could not have been done unless and until the petitioner/assessee had made the full and true disclosure of the material particulars - the notice in this petition has not been withdrawn because the Revenue s audit objections are still alive - the notice is without jurisdiction and it is to be set aside Decided in favour of assessee.

Summary

Issues involved:
Challenging notice under Section 148 of Income Tax Act for assessment year 2006-07; Allegation of failure to disclose all material particulars; Consideration of original assessment proceedings; Withdrawal of similar notices for other assessment years.

Detailed Analysis:

1. Challenge to Notice under Section 148:
The writ petition challenges the notice issued under Section 148 of the Income Tax Act for the assessment year 2006-07. The petitioner contests the validity of the notice and the subsequent proceedings initiated based on it.

2. Allegation of Failure to Disclose Material Particulars:
The petitioner argues that the conditions stipulated in the first proviso to Section 147 of the Income Tax Act, requiring a failure to fully and truly disclose all material particulars, are not met. The petitioner asserts that there was a full and true disclosure of all material particulars necessary for assessment.

3. Consideration of Original Assessment Proceedings:
During the original assessment proceedings culminating in the assessment order under Section 143(3) of the Income Tax Act dated 1st December 2008, it was noted that the petitioner had categorically disclosed the tax rate applicable under the India-Australia Double Tax Avoidance Treaty. The Assessing Officer accepted this disclosure, indicating that there was no failure to disclose material particulars.

4. Withdrawal of Similar Notices for Other Assessment Years:
The petitioner had previously challenged similar notices under Section 148 for assessment years 2005-06 and 2007-08 through separate writ petitions. The Revenue withdrew the notices for those assessment years during the pendency of the writ petitions. This withdrawal was recorded in the court order disposing of those petitions.

5. Quashing of Notice and Proceedings:
The High Court, after considering the arguments and evidence presented, quashed the notice under Section 148 dated 28th March 2013 and the subsequent proceedings. The court found that there was no failure on the part of the petitioner to disclose material particulars, and the notice was without jurisdiction.

In conclusion, the High Court allowed the writ petition, quashed the notice and proceedings, and ruled that there shall be no order as to costs. The judgment emphasized the importance of full and true disclosure of material particulars by the assessee and highlighted the significance of adherence to the provisions of the Double Tax Avoidance Treaty in determining tax liabilities.