2018 (12) TMI 1975 - HC - Income Tax

Reopening of assessment u/s 147 - notice beyond a period of four years - long term capital gain on listed securities and claimed exemption under section 10(38) - Assessee submitted that in the absence of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the assumption of jurisdiction on the part of the AO is invalid - Also AO has proceeded on a factually incorrect premise insofar as the value of Alpha Graphics Scrip is concerned as well as on the incorrect premise that no scrutiny assessment was made in the year under consideration. HELD THAT - Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 5th February, 2019. By way of ad-interim relief, the respondent is permitted to proceed further with the assessment; he, however, shall not pass the final order without the permission of this court.

Summary

Issues involved:
Reopening of assessment for assessment year 2012-13 beyond the statutory period under section 147 of the Income Tax Act, 1961; Validity of jurisdiction assumed by the Assessing Officer due to a change of opinion without failure to disclose material facts; Incorrect factual premise by the Assessing Officer regarding the sale price of "Alpha Graphics" Scrip and scrutiny assessment.

Analysis:
The petitioner's advocate argued that the notice issued under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the year 2012-13, was beyond the permissible period of four years from the end of the relevant assessment year. It was contended that the proviso to section 147 of the Act would be attracted in this case, as the assessment was sought to be reopened after the statutory limit had expired.

The reasons recorded by the Assessing Officer were scrutinized, revealing that the assessment for the year under consideration had been completed under section 143(3) of the Act after the petitioner had provided all necessary documentary evidence to support the exemption claimed under section 10(38) of the Act. It was argued that the Assessing Officer, having thoroughly examined the material during the scrutiny assessment, was now attempting to reopen the assessment based on a mere change of opinion, which was impermissible.

Furthermore, it was highlighted that the Assessing Officer failed to allege anywhere in the reasons recorded that the petitioner had not fully and truly disclosed all material facts necessary for assessment during the regular assessment. This omission was crucial, as the assumption of jurisdiction by the Assessing Officer would be invalid in the absence of any failure on the petitioner's part to make complete disclosures.

A factual discrepancy was pointed out regarding the sale price of the "Alpha Graphics" Scrip, with the Assessing Officer incorrectly stating the amount in the reasons recorded. The petitioner had shown a different sale price in the statement of exempt long-term capital gain. This factual inaccuracy, coupled with the incorrect premise that no scrutiny assessment had been conducted in the relevant year, further raised concerns about the validity of the reassessment proceedings.

In light of the submissions made by the petitioner's advocate, the court issued a notice returnable on a specified date and granted ad-interim relief to the respondent to continue with the assessment process, subject to the condition that no final order shall be passed without the court's permission. Direct service of the order was permitted to ensure compliance with the court's directives.