2018 (7) TMI 464 - HC - Income Tax

Reopening of assessment - validity of reasons to believe - Held that - Petitioner had produced all the necessary documents before the Assessing Officer. The fresh exercise is only a change of opinion. Just by stating absence of information , the Respondent cannot get over the jurisdiction bar. The Petitioner in their reply had pointed out that all the necessary documents were produced, but that explanation was not considered. Such course of action is not permitted, in view of the language of Sections 147 and 148 of the Income Tax Act. The Respondent Commissioner thus has no jurisdiction to proceed. While passing the impugned order, the Assistant Commissioner of Income Tax has made some observations for which we have already commented upon the other decisions and copy of the decision is sent to the Principal Chief Commissioner of Income Tax. - Decided in favour of assessee

Summary

Issues: Challenge to notice and order by Assistant Commissioner of Income Tax for assessment year 2010-11; Reopening of assessment after four years; Failure to disclose material facts; Jurisdictional requirements under Sections 147 and 148 of the Income Tax Act; Reasons supplied for reassessment.

Analysis:
The petitioner, a Cooperative Bank, challenged a notice and order by the Assistant Commissioner of Income Tax for the assessment year 2010-11. The petitioner filed its e-return declaring total income, which was processed under Section 143(1) of the Income Tax Act. Subsequently, the case was selected for scrutiny, and certain claims were disallowed while others were allowed by the Assessing Officer. A notice was issued for reassessment in 2016, and reasons were provided in 2017, to which the petitioner replied. The Assistant Commissioner rejected the objections, and after remand proceedings, passed the impugned order in December 2017.

In the case, the assessment was sought to be reopened after four years, which necessitated a failure on the part of the assessee to disclose material facts, as per Sections 147 and 148 of the Income Tax Act. The petitioner argued that all facts and records were presented to the Assessing Officer, and the reassessment was based on a mere change of opinion rather than non-disclosure of material facts. The jurisdictional requirement for reassessment after four years was emphasized as a key aspect, allowing the assessee to challenge such actions under Article 226 of the Constitution of India.

The foundation of jurisdiction under Sections 147 and 148 of the Income Tax Act lies in the reasons supplied for reassessment. The reasons highlighted various debits in the petitioner's accounts, claiming that failure to add them back resulted in an escapement of income. The absence of information regarding depreciation and excess claims were also mentioned as reasons for reopening the assessment. The petitioner contended that all necessary documents were provided, and the reassessment was merely a change of opinion, lacking the jurisdictional basis required by the Act.

Ultimately, the court found that the actions of the respondents were without jurisdiction, and the petitioner was entitled to succeed. The rule was made absolute in favor of the petitioner, with no order as to costs. The judgment underscored the importance of jurisdictional requirements, non-disclosure of material facts, and the need for reasons to support reassessment under the relevant provisions of the Income Tax Act.