2021 (12) TMI 1409 - HC - Income Tax

Reopening of assessment u/s 147 - assumption of jurisdiction itself is bad in law - reopening as beyond a period of four years - HELD THAT - This is purely a question of law which arises for consideration as the reopening is beyond a period of four years and the reasons recorded do not, in any manner, say that there was anything that had been done on the part of the petitioner assessee which has led to the income escaping the assessment. In absence of failure disclosed fully and truly all material facts, any reopening beyond a period of four years from the end of the assessment year 2014-15 is unsustainable. There is no whisper of the failure of the part of the petitioner of the true and full disclosure in the reasons which have been furnished and therefore, the petitioner has to be considered as a victim and with that being clear in the mind of the revenue also, this notice has been issued, and hence, this requires indulgence. The present petition stands disposed of as withdrawn.

Summary

Issues:
Challenge to notice under Section 148 of Income-Tax Act for assessment year 2014-15.

Analysis:
The petitioner, a foreign company with a project office in India, challenged a notice issued by the respondent under Section 148 of the Income-Tax Act for the assessment year 2014-15. The petitioner had filed its original return of income on 29.11.2014, declaring a total income of Rs. 104,83,51,430, which was revised to Rs. 67,42,11,740 on 31.03.2016. The assessment order was passed on 15.02.2017, determining the income at Rs. 130,80,53,520. Subsequently, a notice was issued on 06.10.2020 seeking details regarding payments made under Section 35(i)(ii) of the Income-Tax Act. The respondent issued a notice under Section 148 on 31.03.2021 to reopen the assessment for the same year.

The petitioner contended that the reopening of the assessment, beyond a period of four years, was unsustainable as there was no failure on their part to disclose fully and truly all material facts leading to income escaping assessment. The reasons recorded for reopening did not indicate any such failure on the part of the petitioner. The petitioner argued that they should be considered a victim in this scenario. Citing legal precedents such as Parashuram Pottery Works Co. Ltd. vs. Income-tax Officer and Shree Bansidhar Spg. & Wvg. Mills (P.) Ltd. vs. Income-tax Officer, the petitioner's advocate emphasized that the notice was issued without proper grounds.

During the hearing, the petitioner's advocate sought withdrawal of the petition, and the court disposed of the petition as withdrawn. The judgment did not delve into the merits of the petitioner's contentions regarding the validity of the notice issued under Section 148 of the Income-Tax Act for the assessment year 2014-15.