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2016 (7) TMI 850 - HC - Income TaxReopening of assessment - investment allowance under Section 32A - Held that - A subsequent reversal of the legal position by the Apex Court will not authorize the Revenue to reopen an assessment beyond a period of four years from the end of the Assessment Years in the absence of failure to disclose truly and fully all material facts necessary for assessments. In passing we may point out that the Calcutta High Court in Simplex Concrete Piles (India) Ltd. 2003 (4) TMI 90 - CALCUTTA High Court had considered the effect of amendment to Section 147 and 149 of the Act in 1989. Placing reliance upon the Circular No.549 dated 31st October 1989 it had held that though the new provisions of Section 147 and 149 of the Act were introduced w.e.f. 1st April 1989 they would have retrospective effect and govern a notice issued post 1st April 1989 for reopening the assessment for a period prior to 1st April 1989. Besides on facts (similar to the present facts) it found that even under the unamended provisions the notice for reopening is without jurisdiction. Also see Simplex Concrete Piles (India) Ltd 2012 (9) TMI 516 - SUPREME COURT - Decided in favour of assessee.
Issues:
Challenge to Notice under Section 148 of Income Tax Act for reopening assessment for A.Y. 1986-87 based on rejection of investment allowance claim under Section 32A. Jurisdiction of the impugned notice beyond the prescribed period. Interpretation of failure to disclose material facts under Section 147. Application of legal precedents in investment allowance cases, including Deputy Commissioner of Income Tax Vs. Simplex Concrete Piles (India) Ltd. Analysis: The petitioner challenged a Notice under Section 148 of the Income Tax Act, seeking to reopen the assessment for A.Y. 1986-87 due to the rejection of the investment allowance claim under Section 32A. The Assessing Officer had rejected the claim in the assessment order, but the CIT(A) later allowed the claim following Tribunal's orders for previous years. The impugned Notice was issued post a Supreme Court decision in Commissioner of Income Tax Vs. N.C. Bhudhiraja, impacting construction companies. The Notice was challenged as beyond the 4-year limit and lacking disclosure of material facts, invoking the first proviso to Section 147 and rendering it without jurisdiction. The petitioner contended that the issue of investment allowance had been considered by authorities previously, and the decision in Deputy Commissioner of Income Tax Vs. Simplex Concrete Piles (India) Ltd. supported their case. The Apex Court's decision in Simplex Concrete Piles (India) Ltd. clarified that a subsequent reversal of legal position does not justify reopening assessments beyond four years without failure to disclose material facts. The judgment highlighted that even under unamended provisions, the notice for reopening would be without jurisdiction in such cases. The Court found that the issue was settled in favor of the petitioner by the decision in Simplex Concrete Piles (India) Ltd., aligning with the facts of the present case. The judgment emphasized the retrospective effect of amendments to Section 147 and 149 of the Act from 1989, as per Circular No.549. Consequently, the petition was allowed, ruling in favor of the petitioner based on legal precedents and the lack of jurisdiction in the impugned Notice.
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