2022 (4) TMI 1497 - HC - Income Tax

Reopening of assessment u/s 147 - notice beyond period of four years - HELD THAT - Here is a case where reopening is proposed after expiry of four years from the end of relevant assessment year and therefore the proviso to section 147 shall apply. The view of respondent No.1 that he has to only show whether there was any relevant material which a person could have relied upon to form a requisite belief is totally incorrect - AO who wishes to reopen after four years from the end of relevant assessment year is duty bound to make out a case of failure to disclose material facts truly and fully by assessee. Therefore we quash and set aside two orders on objections dated 21.04.2021 and 22.04.2021. We have to also note that in the affidavit-in-reply filed by one Goushkan A. Pathan affirmed on 10.02.2022 respondent admits that the petitioner has submitted all facts fully and truly. The matter is remanded for de novo consideration by J.A.O. who shall pass a reasoned order dealing with all objections and submission of the petitioner. Petitioner is permitted within two weeks from the date of receipt of documents/information referred to in para 2 above to submit further submissions /objections to reopening of assessment.

Summary

Issues:
1. Lack of application of mind in the order passed by respondent No.1 to the objections filed by the petitioner.
2. Failure to provide necessary information to the petitioner regarding the reasons for reopening.
3. Dispute over the application of the proviso to section 147 of the Act in a case of reopening after four years from the relevant assessment year.
4. Admission by the respondent in the affidavit-in-reply that the petitioner has submitted all facts fully and truly.
5. Remand for de novo consideration by the J.A.O. and permission for the petitioner to submit further submissions/objections.
6. Directions for the J.A.O. to dispose of objections within a specified timeframe, provide a personal hearing to the petitioner, and disclose any orders or judgments relied upon.
7. Emphasis on the J.A.O. to address every objection raised by the petitioner in the order.
8. Exclusion of time for completing assessment proceedings from the date of lodging the petition until the disposal of objections.
9. Clarification that no observations on the merits of the case have been made.
10. Disposal of the petition accordingly.

Analysis:

1. The High Court found that the order passed by respondent No.1 lacked the application of mind concerning the objections filed by the petitioner. The Court noted that the Officer referred to certain provisions without addressing the petitioner's objections and failing to provide relevant information from the reasons for reopening (para 1).

2. The Court directed respondent No.1 to furnish specific documents to the petitioner within two weeks, including copies of information/letter, settlement agreement, appeal details, and orders relied upon for reopening (para 2).

3. In the case of reopening after four years from the relevant assessment year, the Court clarified the application of the proviso to section 147 of the Act. It emphasized that the Assessing Officer must establish a failure by the assessee to disclose material facts fully and truly, rejecting the respondent's view on the matter (para 3).

4. Notably, the respondent admitted in an affidavit that the petitioner had submitted all facts fully and truly, reinforcing the petitioner's position (para 4).

5. The matter was remanded for de novo consideration by the J.A.O., allowing the petitioner to submit further submissions or objections within a specified timeframe upon receiving the necessary documents (para 5).

6. Further directions were provided for the J.A.O. to address all objections, conduct a personal hearing, and disclose any orders or judgments relied upon, ensuring a comprehensive review process (para 6).

7. The Court reiterated the importance of the J.A.O. addressing every point raised by the petitioner in the order on objections (para 7).

8. Time exclusion for completing assessment proceedings was granted from the petition's lodging date until the objection's disposal, providing a reasonable timeframe for the process (para 8).

9. The Court explicitly stated that no observations on the case's merits were made, focusing solely on procedural aspects (para 9).

10. Finally, the petition was disposed of in accordance with the directions and clarifications provided throughout the judgment (para 10).