2022 (8) TMI 1279 - HC - Income Tax

Reopening of assessment u/s 147 - Notice after the expiry of 4 years - reliance on self-same material - subject income from sale of right to property in question is taxable under the head capital gains and is taxable in the year of its transfer - HELD THAT - Learned Advocate appearing for the respondents could not deny the admitted factual and legal position that the impugned reassessment proceeding has been initiated and notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of relevant Assessment Year to reopen scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961. The assessment sought to be reopened by the Assessing Officer is against the scrutiny assessment on the issue which was already considered and accepted by the then Assessing Officer after being satisfied with the replies by the assessee petitioner on the quarries raised by the Assessing Officer from time to time in the course of scrutiny assessment. Materials on which Assessing Officer sought to reopen the assessment are not new and are the same which were already available before the then Assessing Officer at the time of scrutiny assessment and the predecessor of the present Assessing Officer had already formed an opinion on the said material and allowed relief to the assessee petitioner on the said issue in course of scrutiny assessment. Respondent revenue could not establish in course of hearing that there was any omission or failure on the part of the assessee petitioner in disclosing truly and fully any material fact necessary for the assessment before the Assessing Officer in course of scrutiny assessment. We are inclined to allow this Writ Petition by quashing the impugned notice under Section 148 relating to Assessment Year 2012-13 and all subsequent proceedings on the basis of the aforesaid impugned notice under Section 148 of the Act by holding that the initiation of impugned reassessment proceeding under Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961 are based on the self-same material which were already available before the Assessing Officer in course of regular assessment and upon which the predecessor of the present Assessing Officer had already formed an opinion and there is no new material which came to the notice and knowledge of the present Assessing Officer which could be called to have been not disclosed truly and fully in course of scrutiny assessment due to any omission or failure on the part of the assessee petitioner to disclose the same truly and fully in course of scrutiny assessment proceeding and further on perusal of materials available on record the impugned reassessment proceeding is on a mere change of opinion. - Decided in favour of assessee.

Issues Involved:
1. Validity of the notice under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to initiate reassessment proceedings under Section 147 of the Income Tax Act, 1961.
3. Alleged failure of the petitioner to disclose fully and truly all material facts necessary for assessment.
4. Allegation of income escaping assessment due to the sale of flats.
5. The legality of reassessment based on the same set of facts and materials available during the original assessment.
6. Impact of the appellate order on the reassessment proceedings.
7. Allegation of receiving an amount from Hi-tech Traders Pvt. Ltd.
8. Nature of the impugned order dated 3rd September 2019.

Detailed Analysis:

1. Validity of the Notice under Section 148:
The petitioner challenged the notice under Section 148 of the Income Tax Act, 1961, issued on 31st March 2019, for the assessment year 2012-13, arguing that it was issued after the expiry of four years from the end of the relevant assessment year. The court held that the notice was not sustainable in law, as there was no mention in the recorded reasons that there was any omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.

2. Jurisdiction of the Assessing Officer:
The petitioner contended that the reassessment proceedings were without or in excess of jurisdiction because the petitioner had disclosed all necessary details during the original assessment. The court agreed, stating that the essential pre-condition for assuming jurisdiction under Section 147 was not satisfied, as there was no failure on the part of the petitioner to disclose material facts.

3. Alleged Failure to Disclose Material Facts:
The petitioner argued that all material facts were disclosed during the original assessment, and there was no new material fact to establish that the petitioner failed to disclose any material fact. The court found that the reassessment proceedings were initiated on the same set of facts and not on any new material, which is legally not permissible.

4. Allegation of Income Escaping Assessment:
The petitioner submitted that the income alleged to have escaped assessment had been duly accounted for and disclosed in the assessment year 2015-16. The court noted that the transfer of immovable properties in question was completed in the financial year 2014-15, and hence, the question of the same escaping assessment in the assessment year 2012-13 did not arise.

5. Legality of Reassessment Based on Same Facts:
The court observed that the reassessment proceedings were initiated on a mere change of opinion on the same set of facts, which were already available to the Assessing Officer during the original assessment. The court cited several judgments, including the case of Calcutta Club Ltd. vs. Income Tax Officer, to support the view that reassessment on the same issues already accepted by the Assessing Officer is not sustainable in law.

6. Impact of the Appellate Order:
The petitioner relied on the decision of the Hon'ble Supreme Court in the case of DIT vs. Atomstroyexport, arguing that the appellate order for the assessment year 2015-16 had already decided the involved issue in favor of the petitioner. The court agreed, stating that the order relating to the assessment year 2015-16 did not survive and was merged with the appellate order, and hence, there cannot be any escapement of income on the alleged ground.

7. Allegation of Receiving Amount from Hi-tech Traders Pvt. Ltd.:
The petitioner refuted the allegation of receiving Rs. 6.48 crore from Hi-tech Traders Pvt. Ltd., stating that no such amount was received during the financial year 2011-12. The court found the allegation to be incorrect and unsupported by any evidence.

8. Nature of the Impugned Order:
The petitioner argued that the impugned order dated 3rd September 2019 was not a 'speaking order' as it did not address the contentions raised by the petitioner. The court agreed, stating that the order was perverse and void ab initio, being without the authority of law.

Conclusion:
The court quashed the impugned notice dated 31st March 2019 under Section 148 of the Income Tax Act, 1961, and all subsequent proceedings based on the said notice. The court held that the reassessment proceedings were initiated on a mere change of opinion on the same set of facts already available during the original assessment, and there was no new material fact to justify the reassessment. The court allowed the writ petition, emphasizing that the reassessment proceedings were not sustainable in law.

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