2015 (12) TMI 1810 - HC - Income Tax

Reopening of assessment u/s 147 - reopening after four years - HELD THAT - Department has issued a notice dated 10.9.2015 under Section 148 of the Act proposing to re-assess the income for the assessment year 2011-12. The reasons to believe proposes that the petitioner has failed to disclose truly and fully all material facts which are necessary for making the assessment for the relevant assessment year. The petitioner has challenged the present reassessment proceeding contending that all the necessary material had been disclosed while filing the return for the assessment year 2011- 12. The proviso to Section 147 indicates that if reassessment proceedings are reopened after the expiry of four years it is essential that an assertion is required to be made that the assessee has failed to disclose fully and truly all the material facts necessary for the assessment for that assessment year. Prima facie in the instant case we find that all necessary material was disclosed by the petitioner when a return was filed on 13.12.2013 which was considered in the original assessment order. Another question which arises for consideration is whether the notice issued under Section 148 of the Act is justifiable after the assessment under Section 143(3) of the Act made by the assessing officer is quashed. We accordingly direct Sri Ashok Kumar the learned counsel for the Income Tax Department along with Sri Shubham Agarwal and Sri Ashok Mehta the learned senior counsel to file a counter affidavit by 10.1.2016. Sri P. Chidambaram the learned senior counsel along with Abhinav Mehrotra Advocate for the petitioner will file a rejoinder affidavit within a week thereafter.

Summary

Issues:
1. Jurisdiction of assessing officer under Section 143(3) of the Income Tax Act.
2. Validity of reassessment proceedings under Section 148 of the Act.

Analysis:

Issue 1: Jurisdiction of assessing officer under Section 143(3) of the Income Tax Act:
The petitioner filed a return for the assessment year 2011-12, claiming exemption from income tax. However, the assessing officer made an assessment order under Section 143(3) of the Income Tax Act without issuing a notice under Section 143(2) of the Act, which is a mandatory requirement before making an assessment. The Tribunal allowed the petitioner's appeal, and the High Court affirmed the Tribunal's decision, holding that the assessing officer lacked jurisdiction to make the assessment under Section 143(3) due to the failure to issue the necessary notice.

Issue 2: Validity of reassessment proceedings under Section 148 of the Act:
Subsequently, the Department issued a notice under Section 148 of the Act for re-assessment of income for the same assessment year, alleging that the petitioner had not fully disclosed all material facts necessary for the assessment. The petitioner contested the reassessment, claiming that all required information had been disclosed during the original filing. The Court noted that the proviso to Section 147 mandates that if reassessment is initiated after four years, it must be based on the assessee's failure to disclose material facts. In this case, the Court found that the necessary material was indeed disclosed in the original return filed by the petitioner.

In conclusion, the Court directed the Income Tax Department's counsel to submit a counter affidavit, and the petitioner's counsel to file a rejoinder affidavit. The matter was listed for admission and final disposal on a specified date, and the Court ordered a stay on further reassessment proceedings for the assessment year 2011-12 under Section 148 of the Income Tax Act.