2019 (2) TMI 60 - HC - Income Tax

Reopening of assessment - MAT computation - determination of book profit u/s 115JB - Held that - As regular assessment proceedings for the subject assessment year were completed on 17th March, 2015 under Section 143(3) of the Act. The reasons in support the impugned notice do not indicate that there was any failure on the part of the petitioner to truly and fully disclose all material and primary facts necessary for assessment truly and fully, during the regular proceedings under Section 143(3) of the Act. Thus, on this short ground itself the impugned notice is hit by the proviso to Section 147 of the Act and is without jurisdiction. Also during the assessment proceeding queries were raised by the Assessing Officer with regard to the petitioner s claim for provision for doubtful debts and petitioner had responded to same in detail by its letter dated 12th January, 2015. It was after AO satisfying himself with the petitioner s reply that the petitioner s book profit were determined under section 115JB of the Act. This would indicate that the impugned notice is an attempt to review the order dated 17th March, 2015 under Section 143(3) of the Act, which is clearly not permissible. - Decided in favour of assessee.

Summary

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

Analysis:
The petitioner filed a return of income for Assessment Year 2011-12 on 30th November, 2011, declaring a total income of ?1.76 crores along with Form 29B for computation of book profit under Section 115JB of the Act. The Assessing Officer, after making inquiries regarding provision for doubtful debts, completed the assessment on 17th March, 2015, without making any addition for the provision of doubtful debt. However, a notice dated 27th March, 2018, was issued seeking to reopen the assessment based on the contention that the petitioner did not add ?8,69,58,000 as provision for doubtful debts while computing book profit under Section 115JB. The reasons for reopening highlighted that income chargeable to tax had escaped assessment due to the omission of this amount. The petitioner objected to the reopening, but the Assessing Officer rejected the objection, leading to the present petition challenging the jurisdiction of the Assessing Officer to issue the notice.

The High Court noted that the impugned notice was issued beyond the 4-year period from the end of the relevant assessment year, and the reasons did not indicate any failure on the petitioner's part to disclose all material facts during the regular assessment proceedings under Section 143(3) of the Act. The Court observed that during the assessment proceedings, queries were raised regarding the provision for doubtful debts, and the petitioner had responded satisfactorily, leading to the determination of book profit under Section 115JB. Therefore, the attempt to review the order dated 17th March, 2015, through the impugned notice was deemed impermissible. Consequently, the Court held that the notice was without jurisdiction as it violated the proviso to Section 147 of the Act and amounted to a change of opinion, thereby quashing and setting it aside.

In conclusion, the High Court disposed of the petition, emphasizing that the impugned notice lacked jurisdiction due to being issued beyond the statutory period and attempting to reassess a matter already considered during the regular assessment proceedings, thereby violating the principles of the Income Tax Act.