2022 (10) TMI 421 - HC - Income Tax

Reopening of assessment u/s 147 - suspicious bank transactions - HELD THAT - Communications/responses of the petitioner during the original assessment do not reveal the existence of the bank account at ICICI, R.S.Puram Branch. In this regard, mere reference to the aforesaid bank account in the communication addressed to the ITO (ICI) will be of no aid to the petitioner. The criminal investigation wing is separate and distinct from the assessment wing and disclosure made before one wing will not exonerate the petitioner from the requirement of making a full and true disclosure before the assessing officer in assessment. The apparent difference in the communications addressed to the assessing authority on the one hand and the ITO (ICI) on the other, would itself illustrate the difference in the disclosures made before the two authorities. Records have been summoned and produced by the standing counsel, that confirm the averment in counter to the effect that there was no disclosure of the account in ICICI bank R S Puram at the time of assessment. In the absence of a full and true disclosure by the petitioner at the first instance, the assumption of jurisdiction by the assessing authority beyond the period of four years is not barred by limitation, and cannot be faulted. The impugned order is confirmed and the writ petition is dismissed.

Summary

Issues:
Challenge to re-assessment under the Income Tax Act, 1961 for A.Y. 2011-2012 based on failure to disclose relevant facts leading to initiation of proceedings under Section 147.

Analysis:

1. The petitioner challenged the re-assessment proceedings initiated under the Income Tax Act, 1961 for the assessment year 2011-2012. The petitioner filed the return of income on time, which was taken up for scrutiny. The assessing authority issued notices under Section 143(2) and later, the Income Tax Officer from the Intelligence and Criminal Investigation wing requested information under Section 133(6) regarding cash deposits exceeding Rs.2 lakhs.

2. The petitioner provided bank statements from various banks but omitted the ICICI bank statement in subsequent communications. The assessment was completed under Section 143(3) based on available materials. However, the Department issued a notice under Section 148 after four years, requiring satisfaction of additional conditions under the proviso to Section 147 regarding incomplete or untrue disclosure of facts.

3. The petitioner sought reasons for reassessment, which highlighted discrepancies in the cash deposits and transactions in the ICICI bank account. The Assessing Officer believed that income had escaped assessment due to the failure to verify these deposits during the initial assessment under Section 143(3). The petitioner contended that the fault lay with the assessing authority for not verifying the ICICI bank deposits initially.

4. The court examined the jurisdiction of the respondent under the proviso to Section 147, emphasizing the requirement for full and true disclosure of material facts by the assessee. It was observed that the petitioner did not disclose the ICICI bank account details adequately during the original assessment, which led to the initiation of re-assessment proceedings beyond the four-year limitation period.

5. The court noted the distinction between disclosures made to different wings of the Income Tax Department and emphasized the necessity of full and true disclosure before the assessing officer during assessment proceedings. The lack of disclosure regarding the ICICI bank account at the initial stage justified the assumption of jurisdiction by the assessing authority for re-assessment beyond the limitation period.

6. Consequently, the court upheld the impugned order confirming the assumption of jurisdiction by the assessing authority for re-assessment. The writ petition was dismissed, and no costs were awarded. The connected miscellaneous petition was closed, concluding the legal judgment on the matter.