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2023 (2) TMI 429 - HC - Income TaxReopening of assessment u/s 147 - non-disclosure of certain transactions, which have been mentioned in the reasons recorded by the Assessing Officer during the original assessment proceedings - Basis is the information derived from the Insight Portal of the department as certain transactions pertaining to purchase and sale of equity as also trading in derivatives on the recognised stock exchanges - HELD THAT - In the present case, it is not the stand of the revenue that the Assessing Officer had not sought for the copies of all the demat account of the assessee for the relevant financial year 2012-13, or that even when it was called, it was not furnished by the assessee. Neither is it the case of the revenue that the reconciliation statement sought by the AO and other details contained in various notices issued by the Assessing Officer were not provided during the course of the proceedings. If that be so, we find it difficult to accept the argument that the petitioner had failed to disclose all material facts fully and truly. Petitioner took pains to explain to us each and every transaction which otherwise forms a part of the reasons recorded, with the transaction statements placed on record as also the reconciliation statement prepared by the petitioner in the present case - AO upon receipt of the information regarding the transactions made by the petitioner, proceeded to presume that the same were not disclosed by the petitioner during the course of the earlier proceedings under section 143(3) of the Act, which presumption in our opinion was not only erroneous but contrary to the record. There was no basis to hold that there was any failure on the part of the assessee to disclose any material facts fully and truly during the regular assessment proceedings and further that reassessment proceedings are nothing but a change of opinion. In our opinion, the impugned notice also the order of reassessment are without jurisdiction, and are, therefore, quashed and set aside. - Decided in favour of assessee.
Issues Involved:
1. Legality of the reassessment proceedings initiated under section 148 of the Income Tax Act, 1961. 2. Validity of the demand notices and penalty notice issued pursuant to the reassessment order. 3. Alleged failure of the petitioner to disclose material facts fully and truly during the original assessment proceedings. 4. Justification for reopening the assessment based on the information from the Insight Portal and the Annual Information Report. Detailed Analysis: 1. Legality of the reassessment proceedings initiated under section 148 of the Income Tax Act, 1961: The petitioner challenged the reassessment proceedings initiated via notice dated 31st March 2022 under section 148 of the Income Tax Act, 1961, leading to the final reassessment order dated 26th March 2022 for the assessment year 2013-14. The petitioner argued that there was no failure on their part to disclose any material fact fully and truly, which is a condition precedent for exercising jurisdiction beyond the period of four years as per the first proviso to section 147 of the Act. The court concluded that the reassessment proceedings were initiated without jurisdiction, as there was no failure on the part of the petitioner to disclose material facts fully and truly during the original assessment proceedings. 2. Validity of the demand notices and penalty notice issued pursuant to the reassessment order: The demand notices and penalty notice, both dated 26th March 2022, issued pursuant to the reassessment order, were also challenged. The court held that since the reassessment proceedings were without jurisdiction, all consequential orders and notices, including the demand and penalty notices, were quashed and set aside. 3. Alleged failure of the petitioner to disclose material facts fully and truly during the original assessment proceedings: The petitioner contended that all transactions referred to in the reasons recorded for reopening the assessment had been furnished during the original scrutiny assessment proceedings. The petitioner had provided all requisite details, including certified copies of the auditor's report, balance-sheet, profit and loss account, Form 10DB, and scrip-wise details of opening stock, purchases, sales, and closing stock. The court found that the petitioner had indeed disclosed all material facts fully and truly during the original assessment proceedings. The court noted that the Assessing Officer had called for and received all necessary documents and details during the original assessment proceedings. 4. Justification for reopening the assessment based on the information from the Insight Portal and the Annual Information Report: The reassessment was based on information derived from the Insight Portal and the Annual Information Report, which flagged certain transactions of purchase and sale of equity and trading in derivatives. The court observed that the reasons for reopening the assessment were erroneous and contrary to the record, as the petitioner had disclosed all transactions during the original assessment proceedings. The court held that the reassessment proceedings were nothing but a change of opinion, which is not permissible under the law. Conclusion: The court quashed and set aside the impugned notice and the order of reassessment, along with all consequential orders and notices, including the demand and penalty notices. The petition was disposed of accordingly.
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