2022 (11) TMI 912 - AT - Income Tax

Reopening of assessment u/s 147 - correctness of claim made u/s 54F - HELD THAT - Reasons recorded by AO to reopen the assessment for the purpose of verification of the claim made u/s 54F are not in accordance with law. While reopening the assessment, AO has to record his satisfaction that there is an escapement of income chargeable to tax. However, in this case, the reopening was done on the ground to verify the correctness of claim made u/s 54F which is not in accordance with law. Therefore, we hold that the reopening is invalid. CIT(A) has recorded that the 4 years had already passed from the end of the assessment year, which means, the reopening was done after 4 years. In the reasons recorded by the Assessing Officer, this fact is not coming out. AO has not recorded that there is a failure on the part of the assessee to disclose fully and truly all material facts to complete the assessment. On this count also, the reopening is invalid. Accordingly, we quash the notice issued under section 148 - ground raised by the assessee is allowed.

Summary

Issues:
1. Delay in filing the appeal due to Covid-19 pandemic.
2. Reopening of assessment under section 147 of the Income Tax Act.
3. Validity of the reasons recorded for reopening the assessment.
4. Escapement of income chargeable to tax.

Analysis:
1. The appeal was delayed by 37 days due to the Covid-19 pandemic, and the delay was condoned for adjudication.

2. The assessment was reopened under section 147 of the Income Tax Act for the assessment year 2011-12. The Assessing Officer reopened the assessment to verify the correctness of the claim made under section 54F of the Act. The assessee challenged the reopening before the Tribunal.

3. The Tribunal observed that the reasons recorded for reopening the assessment were not in accordance with the law. The Assessing Officer did not establish an escapement of income chargeable to tax but reopened the assessment solely to verify the claim made under section 54F. The Tribunal held that the reopening was invalid as it did not meet the legal requirements.

4. Additionally, the Tribunal noted that the reopening was done after the lapse of four years from the end of the assessment year. The Assessing Officer failed to mention any failure on the part of the assessee to disclose material facts for completing the assessment. Therefore, the Tribunal quashed the notice issued under section 148 of the Act and the assessment order passed under section 143(3) r.w.s. 147 of the Act, allowing the appeal filed by the assessee.

This comprehensive analysis highlights the issues of delay in filing the appeal, the validity of the reasons for reopening the assessment, and the requirement for establishing escapement of income chargeable to tax in such cases.