2022 (1) TMI 433 - HC - Income Tax

Reopening of assessment u/s 147 - Eligibility of reasons to believe - Department received certain information from the Directorate of Income Tax, Intelligence Criminal Investigation that acquisition of Brands and Goodwill as claimed by Petitioner was incorrect and the said transfer has not been established - HELD THAT - The factum of failure to disclose cannot be culled from the reasons in support of the notice seeking reopening of the assessment. No case of failure to disclose is made out. In our view, on consideration of material, the Assessing Officer has conclusively taken one view and hence based on the same material, it will not be open to reopen the assessment with a view to take another view. Assessing Officer after considering all these points passed the assessment order dated 23rd March, 2016, accepting the fact that transfer has been established and there was proper acquisition of the Brands and Goodwill, as claimed by Petitioner. It is true that there is no detail reference to the query raised by the Assessing Officer during the assessment proceedings and the reply provided by the Assessee alongwith documentary evidence. But, once the query raised was subject to the consideration of the Assessing Officer, while completing the assessment, it is not necessary that the assessment order should contain reference and/ or discussion to disclose his satisfaction in respect of each of the query raised. If the Assessing Officer has to record the consideration bestowed by him on all issues raised during the assessment proceedings even where he is satisfied, then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him under section 143 (3). Assessing Officer had in his possession all material facts when he made original assessment. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of the opinion to commence proceedings for re-assessment. Where on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. See Ananta Landmark (P.) Ltd. 2021 (10) TMI 71 - BOMBAY HIGH COURT - reopening notice quashed - Decided in favour of assessee.

Issues:
1. Validity of notice under section 148 of the Income Tax Act for Assessment Year 2012-13.
2. Failure to disclose material facts by the Petitioner for assessment.
3. Reopening of assessment based on the same set of facts.
4. Acquisition of Brands and Goodwill by the Petitioner and claimed depreciation.
5. Compliance with disclosure requirements during assessment proceedings.
6. Jurisdiction of the Assessing Officer to initiate reassessment.

Analysis:

1. Validity of notice under section 148:
The Petitioner filed the return of Income for the Assessment Year 2012-13, declaring a total loss. Subsequently, a notice under section 148 was issued. The Petitioner argued that the notice was beyond the permissible period for reassessment. However, the Respondent contended that failure to disclose material facts justified the notice. The court examined the reasons provided and concluded that no failure to disclose was evident. Therefore, the notice under section 148 was deemed invalid.

2. Failure to disclose material facts:
The Respondent alleged that the Petitioner failed to disclose material facts regarding the acquisition of Brands and Goodwill, leading to incorrect depreciation claims. The court reviewed the assessment proceedings and found that the information on acquisition was available and analyzed by the Assessing Officer. The Petitioner had submitted relevant documents and explanations during the assessment process. Consequently, the court held that there was no failure to disclose material facts by the Petitioner.

3. Reopening of assessment based on the same set of facts:
The court emphasized that if the Assessing Officer conclusively took one view based on the material during the original assessment, it was impermissible to reopen the assessment to consider an alternative view. Reopening the assessment on the same set of facts to change the view was deemed legally untenable.

4. Acquisition of Brands and Goodwill:
The court noted that the Assessing Officer had all the necessary information regarding the acquisition of Brands and Goodwill by the Petitioner. The Petitioner had provided detailed explanations, documents, and valuation reports during the assessment process. The court highlighted the compliance of the Petitioner with disclosure requirements and the Assessing Officer's consideration of the relevant details.

5. Compliance with disclosure requirements:
The court underscored the importance of fully and truly disclosing primary facts necessary for assessment. It was established that the Petitioner had provided comprehensive information and responses to the Assessing Officer's queries during the assessment proceedings. The court referenced previous judgments supporting the principle that once one view is conclusively taken by the Assessing Officer based on the material, reassessment based on the same material for an alternative view is impermissible.

6. Jurisdiction of the Assessing Officer:
In conclusion, the court quashed the notice issued for reopening the assessment for Assessment Year 2012-13, citing the absence of failure to disclose material facts and the impermissibility of reassessment based on the same set of facts. The court's decision was supported by legal precedents emphasizing the significance of fully disclosing primary facts for assessment and the limitations on reassessment based on the same material.

← Previous Next →