2019 (12) TMI 266 - HC - Income Tax

Reopening of assessment u/s 147 - as argued notice is beyond the period of 4 years from the end of the relevant assessment year as the assessment was completed u/s 143(3) - HELD THAT - As submitted that the notice is not hit by the first proviso to Section 147 of the Act. However, the petitioner points out that the impugned notice proceed on the basis that the consideration received for the sale of shares was Nil. This is factually incorrect. According to the petitioners they had sold the same at market value at the stock exchange and the same was subject to examination during regular assessment proceedings leading to an order under Section 143(3) of the Act. The respondents have not disputed the same. In the above view, a prima facie case has been made out by the petitioner that the above indicates non-application of mind to the facts in issuing the impugned notice and also a case of change of opinion. Thus, the Assessing Officer could not have any reason to believe that income chargeable to tax has escaped assessment. Therefore, prima facie without jurisdiction.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 seeking to reopen assessment for Assessment Year 2012-13.

Analysis:
The petition challenges a notice dated 20th March, 2019, issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for Assessment Year 2012-13. The petitioner argues that the notice is beyond the 4-year period from the end of the relevant assessment year, as the assessment was already completed under Section 143(3) of the Act. The petitioner asserts that there was no failure on its part to disclose all material facts necessary for assessment. However, the respondent contends that fresh tangible material was received by the Assessing Officer, specifically an order of the Commissioner of Income Tax (Appeals) in relation to group companies. The petitioner highlights that the notice proceeds on the incorrect basis that the consideration received for the sale of shares was Nil, whereas they had actually sold them at market value on the stock exchange, a fact that was examined during regular assessment proceedings leading to an order under Section 143(3) of the Act. The respondents have not disputed this fact.

The Court finds that a prima facie case has been made out by the petitioner indicating non-application of mind to the facts in issuing the impugned notice and a possible change of opinion. Consequently, the Assessing Officer lacked any reason to believe that income chargeable to tax had escaped assessment, rendering the notice prima facie without jurisdiction. Therefore, the Court orders an interim stay of the impugned notice dated 20th March, 2019, until the final disposal of the petition.

The respondent's counsel waives service, indicating their acceptance of the proceedings without the need for formal service.