2018 (5) TMI 592 - HC - Income Tax

Reopening of assessment - reasons to believe - unexplained investment - farm house was allotted to the petitioner company by NOIDA Authority - failure to disclose fully and truly all material facts - Held that - The reasons to believe incorrectly record that the assessee had made undisclosed investment and had failed to disclose the same for the assessment year 2010-11. During the year in question, the assessee had paid premium to the NOIDA Authority and not the entire purchase price. Balance premium was payable in the subsequent nine equal installments spread over to four years and six months. The transaction was not between two private individuals, but by the petitioner with NOIDA Authority. NOIDA Authority is established by the State of Uttar Pradesh. We do not see that the reasons to believe recorded establish any live nexus that income had escaped assessment and any fresh material and evidence would show that the original assessment framed under Section 143 (3) was erroneous and wrong - The transaction between the petitioner-assessee and the NOIDA Authority with regard to purchase of the farm house was examined and considered. The law on re-opening does not permit the Assessing Officer to re-examine the issue already examined in regular assessment under Section 143(3). Change of opinion cannot be a ground to re-open scrutiny assessment. - Decided in favour of assessee.

Summary

Issues:
Challenge to re-assessment proceedings under Section 148 for Assessment Year 2010-11; Quashing of order dismissing objections against re-assessment.

Analysis:
The petitioner, a company, filed a return for Assessment Year 2010-11 declaring 'Nil' income, which was taken up for scrutiny due to discrepancies in declared income and capital. The Assessing Officer issued notices and sought detailed information on various financial aspects, including share capital, loans, and investments. The petitioner provided the required details during the assessment proceedings. The initial assessment under Section 143 (3) in 2013 accepted the 'Nil' income, noting that the business had not commenced. However, the Assessing Officer later initiated re-assessment in 2017 based on information regarding the petitioner's purchase of a farm house from NOIDA Authority. The re-assessment reasons cited the purchase amount and lease details, which were already known during the original assessment.

The High Court observed that the lease deed and transaction details were submitted to the Assessing Officer during the first assessment, indicating awareness of the property purchase. The re-opening of assessment was deemed unnecessary as the information was not new or undisclosed. The court highlighted that the Assessing Officer had examined the premium payment and share capital during the original assessment, and the re-assessment did not present any fresh evidence. The court rejected the contention of undisclosed investment, clarifying the payment terms to NOIDA Authority and the absence of any material showing income escapement.

The court emphasized that failure to fully disclose material facts was not established, as the transaction with NOIDA Authority had been scrutinized previously. It reiterated that re-opening assessments based on a change of opinion from the original assessment was impermissible. Consequently, the court allowed the writ petition, setting aside the re-assessment notice and the order dismissing objections, with no costs imposed.