2018 (12) TMI 1349 - HC - Income Tax

Validity of reopening of assessment - notice issued beyond the period of 4 years from the end of the relevant assessment year - lack of true and full disclosure on the part of the petitioner - Held that - From the reasons recorded by the Assessing Officer nothing can be gathered to suggest that there was any failure on the part of the assessee to disclose truly and fully all material facts. In order to bring any element of lack of true and full disclosure the Assessing Officer has merely referred to certain dividend which according to him the petitioner should have paid. When the petitioner s contention is that now such dividend was payable obviously it was not the duty of the petitioner to have made any such reference in the return. Whatever the validity of the Assessing Officer s contention regarding such dividend surely he cannot reopen the assessment beyond the period of 4 years from the end of the relevant assessment year without there being any element of lack of true and full disclosure on the part of the petitioner. Only on this ground the impugned notice is set aside. - Decided in favour of assessee

Summary

Issues:
Challenge to notice of reopening of assessment for Assessment Year 2011-12.

Analysis:
The petitioner, a company engaged in software export and IT services, filed its return of income for Assessment Year 2011-12 on 28.11.2011. The Assessing Officer passed an order of assessment under Section 143(3) of the Income Tax Act, 1961 on 25.05.2015. Subsequently, the Assessing Officer issued a notice of reopening of assessment dated 14.12.2018. The notice was based on the grounds that the petitioner had bought back shares at a premium without distributing dividends, which the Assessing Officer considered a tax avoidance scheme. The Assessing Officer believed that the income of the petitioner had escaped assessment due to non-disclosure of material facts. The petitioner challenged the notice of reopening, arguing that it was issued beyond the 4-year period from the end of the relevant assessment year and that there was no lack of true and full disclosure of material facts on their part. The High Court analyzed the reasons recorded by the Assessing Officer and found that there was no failure on the part of the petitioner to disclose all material facts. The Court held that the impugned notice was set aside solely on the ground that it was issued beyond the permissible period of 4 years, without any lack of true and full disclosure by the petitioner.

In conclusion, the High Court allowed the petition and set aside the notice of reopening of assessment for Assessment Year 2011-12. The Court emphasized that the notice was issued beyond the statutory period of 4 years and that there was no evidence of lack of true and full disclosure of material facts by the petitioner.