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2022 (12) TMI 404 - HC - Income TaxValidity of reopening of assessment - reopening as initiated beyond 4 years - Reasons to believe - HELD THAT - It is settled that if notice under Section 148 of IT Act is to be issued after expiry of four years or before expiry of six years, the assessee should have failed to disclose the material facts . ITAT on consideration of the material on record has held that AO has not even stated or alleged that there was failure on the part of assessee to disclose fully and truly all the material facts necessary for the said assessment years. Nothing contrary to the findings of the ITAT is demonstrated or urged by the Revenue. In view of the settled position of law and the AO not stating that there was failure on the part of the assessee to disclose material facts, no exception can be taken to the order passed by the ITAT. Resultantly, these appeals must fail.
Issues:
Reassessment orders validity under Section 147 for AY 2006-07 and 2007-08 beyond 4 years. Analysis: The appeals by the Revenue challenged the common order in ITA Nos.1017 and 1018/Bang/2015 dated 24.10.2017. The main issue raised was whether the reassessment orders passed for AY 2006-07 and 2007-08 were valid under Section 147, initiated beyond 4 years. The AO issued notices under Section 148 of the IT Act for both years, and the CIT(A) confirmed the reassessment orders. The ITAT partly allowed the appeals, holding that the second notice under Section 148 was bad in law, leading to the Revenue's appeals. The Revenue contended that the ITAT did not examine the issue on merits and only considered technical grounds. On the other hand, the assessee argued that the notice for AY 2006-07 and 2007-08 issued beyond four years lacked reasons stating failure to disclose material facts at the original assessment. The key contention revolved around whether the reasons for reopening the assessment beyond four years were valid. The AO communicated the reasons recorded in the file, indicating discrepancies in the location of certain branches. The ITAT found that the AO did not state or allege any failure by the assessee to disclose all material facts necessary for the assessment years. Citing Hindustan Lever Limited, the Court emphasized that reasons must be read as recorded by the AO without additions or substitutions. As the AO did not mention any failure to disclose material facts, the ITAT's decision was upheld, and the appeals were dismissed, with the question of law answered in favor of the assessee and against the Revenue. In conclusion, the judgment centered on the validity of reassessment orders beyond four years under Section 147 for AY 2006-07 and 2007-08. The Court upheld the ITAT's decision, emphasizing the importance of reasons recorded by the AO and the requirement for failure to disclose material facts for reopening assessments after the prescribed period. The judgment highlighted the need for strict adherence to legal procedures and established principles in tax assessments to ensure fairness and compliance with the law.
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