2018 (11) TMI 1560 - HC - Income Tax

Reopening proceedings - addition of interest due and payable and interest due and accrued - notice beyond the period of 4 years from the end of the relevant assessment year - Held that - Admittedly the reopening notice has been issued beyond a period of four years from the end of the relevant assessment year i.e. 2001-02 in respect of regular assessment completed under Section 143(3). The jurisdictional requirement to issue a reopening notice under the proviso to Section 147, is a failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment during the scrutiny proceedings. In fact, the reasons in support of the reopening notice even do not allege any failure to disclose truly and fully all material facts necessary for assessment. Therefore, the jurisdictional requirement is not satisfied. Tribunal has on facts found that there was a full and true disclosure on the part of the assessee during the regular assessment proceedings. This finding of fact has not been shown to be incorrect or perverse in any manner. No admittedly the reopening notice has been issued beyond a period of four years from the end of the relevant assessment year i.e. 2001-02 in respect of regular assessment completed under Section 143(3) of the Act. The jurisdictional requirement to issue a reopening notice under the proviso to Section 147 of the Act, is a failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment during the scrutiny proceedings. In fact, the reasons in support of the reopening notice even do not allege any failure to disclose truly and fully all material facts necessary for assessment. Therefore, the jurisdictional requirement is not satisfied. Moreover, we find that the Tribunal has on facts found that there was a full and true disclosure on the part of the assessee during the regular assessment proceedings. This finding of fact has not been shown to be incorrect or perverse in any manner. No substantial question of law.

Summary

Issues:
- Challenge to the order passed by the Income Tax Appellate Tribunal regarding the reopening of assessment for Assessment Year 2001-02.

Analysis:
1. The appeal challenges the Tribunal's order on the reopening of assessment for the mentioned year under Section 260A of the Income Tax Act, 1961. The key question raised is whether the Tribunal was correct in quashing the reopening proceedings, alleging no failure on the part of the assessee in disclosing material facts necessary for assessment.

2. The undisputed facts reveal that the return of income for Assessment Year 2001-02 was filed by the respondent, and a scrutiny assessment under Section 143(3) of the Act was conducted, determining the income at ?80.99 crores. Subsequently, the Revenue sought to reopen the assessment in 2018, citing discrepancies in the treatment of interest accrued but not due on investments in the assessee's accounts.

3. The reasons provided for reopening the assessment highlighted the variance in the treatment of accrued interest in the assessee's accounts and the income offered for taxation. The Revenue contended that the accrued interest during the year, amounting to ?16,43,82,436, had escaped assessment, justifying the need for reopening the assessment.

4. The Tribunal's order emphasized that there was a full and true disclosure of all material facts necessary for assessment during the scrutiny proceedings. It noted that the issue regarding interest due and payable versus interest due and accrued was disclosed during the assessment proceedings. The Tribunal found no failure on the part of the assessee to disclose material facts, even though the notice for reopening was issued beyond the prescribed period.

5. The High Court observed that the reopening notice was issued beyond the four-year period from the end of the relevant assessment year, as required under Section 147 of the Act. The jurisdictional requirement for issuing a reopening notice hinges on the failure of the assessee to fully and truly disclose all material facts necessary for assessment during the scrutiny proceedings. Since the reasons for reopening did not allege any such failure, the jurisdictional requirement was deemed unsatisfied.

6. The Court upheld the Tribunal's finding that there was a genuine and complete disclosure by the assessee during the regular assessment proceedings. It concluded that the Tribunal's decision did not warrant interference, as there was no substantial question of law arising from the matter. Consequently, the appeal was dismissed, with no costs imposed.