2018 (10) TMI 378 - HC - Income Tax

Reopening of assessment - eligibility of reason to believe - change of opinion - new material found for reopening - period of limitation - time period for notice - Held that - Assessee did not file a fresh return in response to Section 148 notice and only relied on the original return. Providing certain materials during the earlier reopening proceedings, cannot be equated with the disclosure of true and full material facts necessary for the assessment, unless such material was already placed on record at the time of filing the original return itself. Therefore, whatever the materials filed during the reassessment proceedings relatable to a particular issue, cannot be considered as the true and full disclosure, unless such material is having any connection with the issue for which such reopening was done. On the other hand, such material, not relatable to the issue for the earlier reopening proceedings, will only take the shape of a new and tangible material before the Assessing Officer to reopen the assessment once again. Taking note of the fact that end of the assessment year 2009-10 fell on 31.03.2010, the impugned notice under section 148 having been issued on 15.03.2016, I am of the view that the same is well within the period of six years and therefore, find that the impugned reopening of the assessment is not barred by limitation as contended by the petitioner. The petitioner further contended that notice issued under section 148 dated 15.03.2016 did not allege that the assessee has not disclosed fully and truly all the materials necessary for the assessment and therefore, the issuance of mere notice without such material averment is bad. We do not think that the petitioner is justified in making such contention, more particularly, when the proceedings issued with reasons for reopening the assessment is in clear and categorical terms stated that the assessee has not disclosed fully and truly all the material details necessary for the assessment. - Decided against assessee.

Issues Involved:

1. Reopening of assessment beyond four years.
2. Failure to disclose material facts fully and truly.
3. Limitation for issuing notice under Section 148.
4. Validity of reasons for reopening the assessment.
5. Allegation of change of opinion.

Detailed Analysis:

1. Reopening of assessment beyond four years:

The petitioner challenged the reopening of the assessment on the ground of limitation, arguing that the notice issued under Section 148 on 25.03.2016 was barred by limitation since the reassessment under Section 143(3) read with 147 was completed on 30.12.2011. The Revenue contended that the subject matter of escapement of income, an advance of ?2.75 crores, was not shown in the original return for the assessment year 2009-10. The court noted that the original return filed on 30.07.2009 was processed under Section 143(1), and the reassessment was reopened for a different issue, not related to the ?2.75 crores advance.

2. Failure to disclose material facts fully and truly:

The Revenue argued that the petitioner failed to disclose fully and truly all material facts necessary for the assessment. The court observed that the original return did not reflect the advance made to S.Nagarajan. The petitioner contended that the details were provided during the earlier reassessment proceedings. However, the court held that providing certain materials during reassessment proceedings cannot be equated with the disclosure of true and full material facts necessary for the assessment unless such material was already placed on record at the time of filing the original return.

3. Limitation for issuing notice under Section 148:

The court considered whether the reopening of the assessment was barred by limitation. It was noted that the original return was filed on 30.07.2009, and the earlier reopening notice under Section 148 was issued on 21.02.2011. The reassessment order was passed on 30.12.2011. The court held that the impugned notice under Section 148 issued on 15.03.2016 was within the period of six years as prescribed under Section 149(1)(b), and therefore, the reopening was not barred by limitation.

4. Validity of reasons for reopening the assessment:

The petitioner argued that the notice issued under Section 148 did not allege the failure to disclose fully and truly all material facts necessary for the assessment. The court found that the proceedings issued with reasons for reopening the assessment clearly stated that the assessee had not disclosed fully and truly all the material details necessary for the assessment. The court held that the reasons provided were valid and justified the reopening.

5. Allegation of change of opinion:

The petitioner contended that the reopening was based on a change of opinion. The court referred to the decision in Commissioner of Income Tax vs. Kelvinator of India Ltd., which states that a change of opinion cannot be a reason for reopening the assessment. However, the court found that the subject matter income was never shown in the original return, and therefore, it could not be said that the Assessing Officer had taken a different opinion on the said income.

Conclusion:

The court concluded that the petitioner had not made out a case for interfering with the impugned proceedings of reopening the assessment. The writ petition was dismissed, and the petitioner was advised to produce the relevant details required for completing the assessment pursuant to the impugned proceedings.

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