2020 (2) TMI 1338 - AT - Income Tax

Validity of reopening of assessment u/s 147 - eligibility of reasons to believe - reopening after four years - HELD THAT - The assessment for the assessment year 1989-90 was completed u/s. 143(3) on 29.06.2011. In such case, after the expiry of 4 years from the end of the relevant assessment year, the AO can proceed to reassess the income only when he records the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in that assessment year. In this case, the material on which the Assessing Officer reopened were filed by the assessee was very well considered by the AO. Therefore, the notice issued u/s. 147 does not satisfy the legal condition laid in first proviso to section 147 - Decided in favour of assessee.

Summary

Issues:
Validity of reopening the assessment under section 147.

Analysis:
The appellant, an assessee, challenged the order of the Commissioner of Income Tax (Appeals) regarding the reassessment for the assessment year 2009-10. The primary issue raised was the validity of reopening the assessment under section 147. The appellant contended that the reassessment made by the Assessing Officer was not valid as there was no fresh material and no failure on the part of the assessee to disclose all material facts necessary for assessment. The appellant argued that the reassessment did not meet the legal conditions laid down in the first proviso to section 147 of the Act. The appellant's representative argued that the reassessment was not in accordance with the law and criticized the CIT(A) for upholding the reassessment based on a CBDT instruction without proper application of the law. On the other hand, the Departmental Representative supported the orders of the lower authorities.

The Tribunal considered the submissions of both parties and found merit in the appellant's arguments. The Tribunal observed that the assessment for the relevant year was completed under section 143(3) and after the expiry of four years from the end of the assessment year, the Assessing Officer could only proceed with reassessment if there was a failure on the part of the assessee to disclose all material facts necessary for assessment. However, in this case, the material provided by the assessee was already considered by the AO during the initial assessment. Therefore, the Tribunal concluded that the notice issued under section 147 did not fulfill the legal conditions specified in the first proviso to section 147. Consequently, the Tribunal allowed the assessee's appeal, ruling in favor of the appellant.

In conclusion, the Tribunal held that the reassessment made by the Assessing Officer was not valid as there was no failure on the part of the assessee to disclose all material facts necessary for assessment. The Tribunal found that the notice issued under section 147 did not meet the legal requirements, leading to the allowance of the assessee's appeal against the order of the CIT(A).