2012 (4) TMI 804 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the notice issued u/s 148 of the Income Tax Act, 1961.
2. Jurisdiction of the respondent to re-open the concluded assessment u/s 147 of the Act.
3. Alleged failure of the petitioner to disclose fully and truly all material facts necessary for the assessment.

Summary:

1. Validity of the notice issued u/s 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 1.3.2011 issued u/s 148 of the Act and the consequential order dated 25.11.2011 rejecting the objections raised by the petitioner. The petitioner argued that the re-opening of the assessment was a case of change of opinion on a concluded scrutiny assessment, contrary to the Supreme Court decision in CIT v. Kelvinator of India Ltd. The court noted that the reasons for re-opening did not indicate any fresh tangible material warranting such action.

2. Jurisdiction of the respondent to re-open the concluded assessment u/s 147 of the Act:
The petitioner contended that the respondent lacked jurisdiction to re-open the assessment as there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment. The court observed that the respondent did not address the jurisdiction issue as a preliminary matter and proceeded with the re-assessment based on the explanation to Section 80-IB(10) introduced by the Finance Act, 2009, with retrospective effect from 1.4.2001.

3. Alleged failure of the petitioner to disclose fully and truly all material facts necessary for the assessment:
The petitioner argued that there was no failure to disclose material facts and that the re-opening was based on a mere change of opinion. The court found that the petitioner had submitted all relevant materials during the original assessment, and the respondent did not provide any new facts or reasons to justify the re-opening. The court relied on precedents, including the High Court of Gujarat's decision in Aayojan Developers v. ITO, which held that in the absence of failure to disclose material facts, the re-opening of assessment after four years is invalid.

Conclusion:
The court concluded that the assumption of jurisdiction by the respondent u/s 147 of the Act, after the expiry of four years from the end of the relevant assessment year, was illegal and invalid. Consequently, the proceedings initiated by the issuance of the impugned notice u/s 148 of the Act were unsustainable. The writ petition was allowed, and the connected miscellaneous petition was closed.