2015 (12) TMI 1512 - HC - Income Tax

Reopening of assessment - assessee sold his immovable property and had earned long term capital gain claiming deduction under section 54-EC on investment in Rural Electrification Corporation - Held that - The reasons recorded by the assessing officer do not even suggest that the income chargeable to tax had escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts. The revenue has not, even if possible to do so, demonstrated any such failure on the part of the assessee. In fact, counsel for the petitioner rightly pointed out that not only that all such declarations were in the returns filed, during the assessment also this issue had come up for consideration. The petitioner in communication dated 03.09.2010 had pointed out to the assessing officer the investments made with the Rural Electrification Corporation and in purchase of immovable property. Thus, quite apart from the reasons recorded by the assessing officer not indicating any failure on the part of the assessee to disclose truly and fully all material facts, even the record suggests to the contrary. Reopening quashed - Decided in favour of assessee.

Summary

Issues:
Challenge to notice seeking to re-open assessment under section 148 of the Income-tax Act, 1961 for the assessment year 2008-2009.

Analysis:
1. The petitioner challenged a notice seeking to re-open the assessment for the year 2008-2009 under section 148 of the Income-tax Act, 1961. The assessing officer issued the notice based on discrepancies related to the petitioner's long term capital gains and claimed deductions under sections 54-EC and 54-F of the Act.

2. The assessing officer's reasons for re-opening the assessment included the failure of the assessee to deposit the unutilized amount for the purchase of a new asset before the due date of filing the return, disallowing the deduction claimed under section 54-F. The petitioner objected to the notice, which was rejected by the assessing officer, leading to the petition.

3. During the assessment year, the petitioner earned long term capital gains from the sale of property, claimed deductions under sections 54-EC and 54-F, and filed returns disclosing all relevant information. The revenue contended that the deduction under section 54-F was invalid as the property purchase was made after the return filing deadline.

4. The High Court emphasized that for re-opening an assessment beyond four years, it must be established that income has escaped assessment due to the assessee's failure to disclose material facts fully and truly. The reasons recorded by the assessing officer did not indicate any such failure, and the petitioner had provided all necessary details during assessment proceedings.

5. The assessing officer's reasons did not suggest any non-disclosure of material facts by the assessee. The petitioner had previously submitted documents related to investments made with supporting evidence, indicating full disclosure. Therefore, the court found no basis for re-opening the assessment and quashed the notice issued on 19.01.2015.

6. In conclusion, the High Court ruled in favor of the petitioner, stating that the notice seeking to re-open the assessment for the year 2008-2009 was unjustified as there was no failure on the part of the assessee to disclose all material facts. The petition was disposed of accordingly.