2019 (6) TMI 747 - HC - Income Tax

Reopening of assessment u/s 147 - assessee has failed to disclose the unaccounted cash - Reopening beyond a period of four years - HELD THAT - In this case, earlier an assessment had been framed u/s 143(3) for assessment year 2011-12. The impugned notice u/s 148 has been issued on 28.3.2018, which is clearly beyond a period of four years from the end of the relevant assessment year, and therefore, the first proviso to section 147 would be attracted, consequently, the assessment can be reopened only if there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the year under consideration. It would therefore, be necessary to refer to the reasons recorded to ascertain as to whether the AO has recorded any such satisfaction therein. From the facts recorded it is manifest that what is recorded in the reasons for reopening the assessment is contrary to the record of the case, inasmuch as the record clearly shows that amount of ₹ 46,00,000/- has been duly disclosed by the petitioner in the books of account. Therefore, there is no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment. It follows as a natural corollary that in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration, the assumption of jurisdiction on the part of the AO beyond a period of four years from the end of the relevant assessment year is invalid and without authority of law. As during the course of scrutiny assessment AO had applied his mind to this very aspect and had called for details from the petitioner in respect of the amount deposited with the Dhule Police Station and after considering the explanation tendered by the petitioner did not make any addition in that regard. Evidently, therefore, the AO seeks to reopen the assessment on a mere change of opinion and hence, even on this count the assumption of jurisdiction on the part of the AO is bad in law. - 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:
1. The petitioner challenged the notice dated 28.3.2018 issued by the respondent under section 148 of the Income Tax Act, seeking to reopen the assessment for assessment year 2011-12. The petitioner contended that the cash seized had been fully disclosed in the books of account during scrutiny assessment, and the reopening was based on a change of opinion by the Assessing Officer.

2. The Assessing Officer sought to reopen the assessment based on the seizure of cash from the petitioner by Dhule Police, alleging non-disclosure of unaccounted cash. However, the petitioner had shown the amount in the books of account and responded to queries during scrutiny assessment, indicating full disclosure. The court noted that the reasons for reopening were contrary to the actual records, invalidating the jurisdiction of the Assessing Officer.

3. The court highlighted that the assessment for the relevant year had already been framed under section 143(3) of the Act, and the notice for reopening was issued beyond the four-year limit. As there was no failure on the petitioner's part to disclose material facts, the court deemed the assumption of jurisdiction by the Assessing Officer as invalid and without legal authority.

4. The Assessing Officer's reliance on information beyond the record and failure to consider the petitioner's disclosures during scrutiny assessment led the court to quash the impugned notice dated 28.3.2018 and all proceedings arising from it. The court allowed the petition, setting aside the notice under section 148 of the Income Tax Act, 1961, with no order as to costs.