2016 (12) TMI 117 - HC - Income Tax

Validity of reopening of assessment - transaction with Ahmedabad Stock Exchange - Held that - The condition as provided under Section 147 of the IT Act to reopen the completed assessment beyond the period of four years are not satisfied. Even there is no allegation in record reopening of the assessment that there was any non disclosure on the part of the assessee, which has resulted into escapement of the income. At this stage, it is required to be noted that even in the objection against the reasons recorded it was the specific case on behalf of the assessee that since August, 2004 it was not having any transaction with Ahmedabad Stock Exchange and more particularly during the year under consideration. In the reasons recorded, there is nothing on record that the Assessing Officer on facts formed an opinion that during the year under consideration the assessee was having the transaction with Ahmedabad Stock Exchange. In that view of the matter, even Bye Law No.218 of the Ahmedabad Stock Exchange, upon which reliance has been placed, shall not be attracted and / or applicable at all. In any case, as stated hereinabove, there does not appear to be any non disclosure on the part of the assessee in not disclosing true and correct facts, and therefore, the conditions stipulated under Section 147 to reopen the assessment beyond 4 years are not satisfied. On the aforesaid ground alone, the impugned notice and reassessment proceedings deserves to be quashed and aside - Decided in favour of assessee

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for the Assessment Year 2009-10 beyond four years.

Analysis:
The petitioner sought to quash the notice dated 09/03/2016 issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for the Assessment Year 2009-10 beyond the four-year period. The reasons for reopening included discrepancies in TDS deductions and commission expenses. The Assessing Officer believed that income of &8377; 1,31,87,533 had escaped assessment. However, the petitioner argued that all necessary details were provided during the scrutiny assessment proceedings, and there was no non-disclosure leading to income escapement. The Assessing Officer's grounds for reopening were deemed insufficient as they did not meet the conditions under Section 147 of the IT Act. The petitioner contended that the assessment should not be reopened based on the provided facts and compliance with tax regulations. The court agreed with the petitioner's arguments and quashed the notice for reopening the assessment beyond the four-year limit for the Assessment Year 2009-10.

In conclusion, the High Court of Gujarat ruled in favor of the petitioner, setting aside the notice for reopening the assessment for the Assessment Year 2009-10 beyond the four-year period. The court found that there was no valid ground to reopen the assessment as the conditions under Section 147 of the IT Act were not met. The petitioner had complied with tax regulations and provided all necessary details during the scrutiny assessment proceedings, leading to the dismissal of the Assessing Officer's reasons for reopening the assessment. The court held that there was no non-disclosure of facts by the petitioner, and therefore, the reassessment proceedings were deemed unjustified and were quashed.