2019 (1) TMI 1538 - HC - Income Tax

Reopening of assessment - obligation on the part of the assessee to disclose fully and truly all primary material facts - Held that - In the case of Calcutta Discount Co. Ltd Vs. I.T.O. 1960 (11) TMI 8 - SUPREME COURT it has been held that the obligation on the part of the assessee is to disclose fully and truly all primary material facts which are necessary for assessment. Undisputedly, the fact that the the petitioner had received income on surrender of shares under buy back scheme of the subsidiary company was the material primary facts which was disclosed before the Assessing Officer during the course of regular assessment proceedings. Thus, there was complete disclosure of all primary material facts during the regular assessment proceedings, reopening is not justified. It cannot be said that there was any failure on the part of the petitioner to disclose fully and truly all material facts necessary for reassessment. Thus, the impugned notice is hit by first proviso of Section 147 and is without jurisdiction. Accordingly, impugned notice is quashed and set aside. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act, 1961 for reopening assessment for the assessment year 2011-12.

Analysis:
The petition challenged a notice seeking to reopen the assessment for the assessment year 2011-12 under Article 226 of the Constitution of India. The petitioner had initially declared a loss of &8377; 10.76 crore, which was later reduced to &8377; 2.71 crore by the Assessing Officer. The impugned notice was issued based on the petitioner's profit from surrendering shares for buy-back, claiming exemption under Sections 47(iv) and 47(v) of the Act. The Assessing Officer contended that the provisions of Section 46A dealing with capital gains on buy-back transactions were applicable, and the claim of exemption was incorrect. The petitioner objected to the reasons for reopening, citing lack of failure to disclose all material facts. The court noted that the notice was issued beyond the permissible period and lacked fresh material, rendering it hit by the first proviso to Section 147 of the Act.

The court emphasized the obligation of the assessee to disclose all primary material facts necessary for assessment. It was established that the petitioner had disclosed the income from surrendering shares during the regular assessment proceedings, constituting full disclosure of primary material facts. Therefore, the court concluded that there was no failure on the part of the petitioner to disclose all necessary facts for reassessment. Consequently, the impugned notice was deemed without jurisdiction and was quashed and set aside, leading to the disposal of the petition.