2019 (10) TMI 474 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of reason to believe - HELD THAT - Impugned order of the Tribunal as well as the CIT(A) have found on facts that there was no failure on the part of the respondent assessee to disclose all facts truly and fully as necessary for the assessment. In fact that is evident from the reasons recorded in the reopening notice dated 22nd March 2013. Reasons recorded in support of the reopening notice dated 23rd March 2013 even does not allege that there is any failure on the part of the respondent to disclose truly and fully all material particulars necessary for assessment. Nor does the reading of the reasons as a whole indicate the same. Therefore on the basis of the above facts it was found that the reopening notice is without jurisdiction and hit by the first proviso to Section 147 of the Act. The CIT(A) as well as the Tribunal in support of the impugned order correctly placed reliance upon the decision of this Court in the case of Nirmal Bang Securities Vs. Asstt. Commissioner of Income Tax 2016 (1) TMI 947 - BOMBAY HIGH COURT - No substantial question of law

Summary

Issues:
1. Whether the proceedings under Section 147 were valid in the case due to failure to disclose facts by the assessee.
2. Whether the non-issuance of notice under Section 143(2) rendered the proceedings under Section 147 invalid.

Analysis:

Issue 1: Validity of Proceedings under Section 147
- The respondent, engaged in software business, filed a return declaring Nil income after set off of unabsorbed depreciation.
- A reopening notice was issued in 2013 for Assessment Year 2006-07, citing incorrect depreciation calculation leading to escaped tax.
- The Assessing Officer confirmed the reopening and taxed the income, but the CIT(A) found no failure in disclosure by the assessee.
- The CIT(A) held the reopening notice beyond the four-year limit from the original assessment, making it without jurisdiction.
- The Tribunal upheld the CIT(A)'s view, stating no failure in disclosure by the assessee and the notice being time-barred.
- The Tribunal and CIT(A) relied on the decision in Nirmal Bang Securities case, emphasizing the lack of failure in disclosure.
- The reopening notice was deemed without jurisdiction and hit by the first proviso to Section 147 of the Act.
- The Tribunal dismissed the Revenue's appeal, concluding no substantial question of law arose.

Issue 2: Non-issuance of Notice under Section 143(2)
- Given the resolution of Issue 1, the question regarding the non-issuance of notice under Section 143(2) was deemed academic.
- Consequently, this question was not entertained by the Court.

Conclusion:
- The appeal challenging the Tribunal's order was dismissed with no cost implications.
- The Court affirmed the decisions of the CIT(A) and Tribunal, emphasizing the lack of failure in disclosure by the assessee and the invalidity of the reopening notice under Section 147.