2021 (12) TMI 317 - HC - Income Tax

Reopening of assessment u/s 147 - deductions under Chapter VIA that includes Section 80IA - HELD THAT - The order dated 27/12/2004 for AY 2001-02 on which reliance was placed by Respondent No.1 as a reason for re-opening Petitioner's assessment for AY 1997-98 has been set to nought. On this ground also, the notice dated 30/03/2004 which is impugned in this Petition has to be set aside. We have to note that the jurisdiction exercised to reopen the assessment is not valid inasmuch as before passing the original Assessment Order dated 24/01/2000 for AY 1997-98, Petitioner was called upon to give details by a notice dated 30/07/1999 like nature of business, address of all business premises, details of current assets, details of additions / reductions to fixed assets, date of purchase, etc. Petitioner provided the details by its Advocate's letters dated 29/09/1999 and 14/12/1999. After considering Petitioner's submissions, the Assessing Officer has allowed deductions under Chapter VIA that includes Section 80IA. Therefore, we cannot accept that any new tangible material has been found for re-opening the assessment.

Issues involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for reopening assessment for AY 1997-98.
2. Compliance with the proviso to Section 147 of the Act.
3. Justification for reopening assessment based on failure to disclose material facts.
4. Challenge to the reasons for reopening assessment.
5. Impact of appellate orders on the validity of the reopening.
6. Adequacy of new tangible material for reopening assessment.

Analysis:

1. The High Court examined the validity of a notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment for AY 1997-98. The notice was challenged by the Petitioner, contending that there was no disclosure failure of material facts on their part.

2. The Court considered the proviso to Section 147 of the Act, which allows reopening of assessment after 4 years only if income chargeable to tax has escaped assessment due to the Assessee's failure to disclose fully and truly all material facts. The Court noted that the reasons provided for reopening did not indicate any such failure on the part of the Assessee.

3. The Respondent sought to justify the reopening based on the rejection of certain claims in a subsequent assessment for AY 2001-02. However, the Court found that this alone was not sufficient justification for the reopening of the assessment for AY 1997-98.

4. The Court also considered the impact of appellate orders on the validity of the reopening. It noted that the orders of the CIT(A) and ITAT in favor of the Petitioner regarding deduction under Section 80IA for AY 2001-02 rendered the basis for reopening the assessment for AY 1997-98 invalid.

5. Additionally, the Court found that there was no new tangible material to warrant the reopening of the assessment, as the Assessee had already provided necessary details before the original assessment order was passed.

6. Consequently, the Court allowed the Petition, setting aside the notice dated 30/03/2004 for reopening the assessment for AY 1997-98. The Court held that the jurisdiction exercised to reopen the assessment was not valid, and the Rule granted on 07/03/2005 was made absolute, quashing the reassessment proceedings for the said assessment year.

This detailed analysis of the judgment highlights the key legal arguments and conclusions reached by the Bombay High Court in this case.

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