2019 (6) TMI 528 - AT - Income Tax

Reopening of assessment u/s 147 - issuance of notice u/s 148 after expiry of four years from the end of relevant assessment year - period of limitation - HELD THAT - We find that in the instant case reopening of assessment has been made after expiry of four years from the end of relevant assessment year after passing original assessment order u/s 143(3) on 31.10.2010. Proviso to section 147 states that where an assessment is made u/s 143(3) no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. A bare perusal of the above recorded reasons shows that there is no whisper in the reasons recorded by the Assessing Officer that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Therefore reopening of assessment by issuance of notice u/s 148(2) on 27/3/2015 is bad in law and consequently the order passed in pursuance to such notice is also bad in law. - Decided in favour of assessee.

Issues Involved:
1. Invocation of Section 50C of the I.T. Act, 1961.
2. Sustaining addition based on the D.V.O report received after assessment completion.
3. Validity of reopening assessment under Section 147 of the I.T. Act, 1961.
4. Validity of reference to the Valuation Officer under Section 55A of the I.T. Act, 1961.
5. Sustaining addition based on change of opinion and estimation of Fair Market Value.
6. Validity of piecemeal assessment.
7. Legality and validity of the assessment order.
8. Issuance and service of notice under Section 148.
9. Failure to disclose fully and truly all material facts.
10. Disposal of objections by the appellant on reassessment proceedings.
11. Principles of natural justice and equity.
12. Additional grounds and reliefs sought by the assessee.

Detailed Analysis:

1. Invocation of Section 50C of the I.T. Act, 1961:
The assessee contended that the Ld. CIT(A) erred in invoking Section 50C, thereby sustaining an addition of ?12,62,800/- made by the Assessing Officer (A.O.) on a different basis. The Tribunal found that the reopening of the assessment was not justified, thus nullifying the addition under Section 50C.

2. Sustaining Addition Based on D.V.O Report:
The assessee argued that the addition was based on an erroneous D.V.O report received after the assessment under Section 143(3). The Tribunal did not specifically address the merit of the D.V.O report due to the cancellation of the reassessment order.

3. Validity of Reopening Assessment Under Section 147:
The Tribunal focused on the legality of reopening the assessment after four years from the end of the relevant assessment year. The Tribunal noted that the original assessment was completed under Section 143(3) and that the reopening did not meet the proviso's requirements to Section 147, which necessitates a failure on the part of the assessee to disclose fully and truly all material facts. The Tribunal found no such failure in the recorded reasons, making the reopening invalid.

4. Validity of Reference to the Valuation Officer Under Section 55A:
The Tribunal did not specifically address this issue due to the cancellation of the reassessment order.

5. Sustaining Addition Based on Change of Opinion and Estimation of Fair Market Value:
The assessee claimed that the addition was based on a change of opinion. The Tribunal's decision to cancel the reassessment order rendered this issue academic.

6. Validity of Piecemeal Assessment:
The Tribunal did not specifically address this issue due to the cancellation of the reassessment order.

7. Legality and Validity of the Assessment Order:
The Tribunal found the reassessment order void ab initio due to the improper invocation of Section 147, thus rendering the assessment order invalid.

8. Issuance and Service of Notice Under Section 148:
The assessee argued that no notice under Section 148 was issued and served as per law. The Tribunal's decision to cancel the reassessment order rendered this issue academic.

9. Failure to Disclose Fully and Truly All Material Facts:
The Tribunal emphasized that the recorded reasons for reopening did not indicate any failure by the assessee to disclose fully and truly all material facts necessary for assessment. This omission invalidated the reopening under Section 147.

10. Disposal of Objections by the Appellant on Reassessment Proceedings:
The Tribunal did not specifically address this issue due to the cancellation of the reassessment order.

11. Principles of Natural Justice and Equity:
The Tribunal's decision was guided by legal precedents and principles of natural justice, ensuring that the assessee's rights were upheld.

12. Additional Grounds and Reliefs Sought by the Assessee:
The Tribunal admitted the modified grounds and additional grounds for hearing but focused on the primary issue of the validity of the reassessment, rendering other issues academic.

Conclusion:
The Tribunal concluded that the reopening of the assessment was invalid as it did not meet the requirements of the proviso to Section 147. Consequently, the reassessment order was cancelled, and the appeal filed by the assessee was allowed. Other grounds of appeal were deemed academic and not adjudicated.

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