2017 (1) TMI 847 - HC - Income Tax

Validity of reopening of assessment - reasons to believe - Held that - We find that both the CIT(A) as well as the Tribunal have on facts held that all facts necessary for assessment were truly and fully disclosed by the respondent assessee for the subject assessment year during the assessment proceedings. In fact, even the basis of the present proceedings i.e. the reasons recorded in support of the notice does not support, even remotely, any submission to allege failure on the part of the respondent assessee to truly and fully disclose all necessary facts for assessment. Therefore, as correctly held by the CIT(A) and the Tribunal, the reopening notice dated 24th September, 2003 would be hit by the proviso to Section 147 of the Act.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal for Assessment Year 1997-98 regarding reopening of assessment.

Analysis:
The appeal under Section 260A of the Income Tax Act, 1961 challenges the order of the Income Tax Appellate Tribunal (the Tribunal) dated 12th February, 2014 for Assessment Year 1997-98. The main question raised by the Revenue is whether the Tribunal was correct in holding that the reopening of the case was unjustified due to alleged failure of the assessee to disclose all material facts necessary for assessment and resulting in escaped income. The impugned order states that the respondent assessee originally filed its Return of Income on 28th November, 1997, and later filed a revised Return of Income on 30th March, 1999. The Assessing Officer then passed an assessment order on 25th February, 2000 determining the total income at Nil and book profit at ?39.10 crores under Section 115JA of the Act.

The Assessing Officer issued a notice under Section 148 of the Act on 24th September, 2003, seeking to reopen the assessment for the subject assessment year. The reasons for reopening included discrepancies in business loss computation, pension liability provision, and Chapter VIA deduction. The subsequent assessment order dated 30th December, 2003 rejected the assessee's challenge to the reopening and confirmed the issues raised in the notice. However, on appeal, the Commissioner of Income Tax (Appeals) allowed the assessee's appeal, stating that the reopening notice was beyond the permissible period of four years and lacked evidence of the assessee's failure to fully disclose all material facts during the original assessment under Section 143(3) of the Act.

The Revenue then appealed to the Tribunal, which found that the regular assessment was completed under Section 143(3) of the Act and there was no indication of failure by the assessee to disclose all necessary facts. The Tribunal dismissed the Revenue's appeal, emphasizing that all required facts were disclosed in the revised return of income filed by the assessee. Both the CIT(A) and the Tribunal concluded that there was no failure on the part of the assessee to disclose material facts for assessment, rendering the reopening notice invalid under the proviso to Section 147 of the Act.

Ultimately, the High Court upheld the decisions of the CIT(A) and the Tribunal, stating that the question raised did not present any substantial legal issue. The appeal was dismissed, and no costs were awarded.