2023 (7) TMI 347 - HC - Income Tax

Reopening of assessment u/s 147 - reassessment after the expiry of four (4) years from the end of the relevant AY - reasons to believe - HELD THAT - A perusal of the reasons furnished by the AO for triggering the reassessment proceeding would show that there is no reference to the fact that the petitioner had failed to disclose, fully and truly, all material facts necessary for carrying out the assessment. Since the proceeding was triggered after the expiry of four (4) years from the end of the relevant AY, the concerned officer, i.e., the ACIT, was required to assert that income chargeable to tax has escaped assessment on account of the failure on the part of the petitioner to disclose truly and fully all material facts necessary for assessment qua the concerned AY, as stipulated in the first proviso appended to Section 147 of the Act. Decided in favour of assessee.

Summary

Issues involved: Challenge to notice u/s 148 of Income Tax Act, 1961 and order disposing objections regarding carrying forward unabsorbed business losses and depreciation for setoff in AY 2011-12.

Summary:
1. The writ petition challenged a notice u/s 148 of the Income Tax Act, 1961 and an order disposing objections related to carrying forward unabsorbed business losses and depreciation for setoff in AY 2011-12.

2. The reassessment proceeding was initiated against the petitioner for carrying forward unabsorbed business losses and depreciation for setoff in AY 2011-12.

3. The Assessing Officer (AO) restricted the infraction related to unabsorbed depreciation in the impugned order dated 20.11.2018.

4. The petitioner set off unabsorbed depreciation amounting to Rs. 7,63,79,560/- accumulated between AY 1998-99 and 2001-02 against income in AY 2011-12.

5. The AO believed that the unabsorbed depreciation should not have been set off in AY 2011-12 as it exceeded the prescribed period for carrying forward unabsorbed depreciation.

6. Counsel for the petitioner argued that there was no restriction on setting off unabsorbed depreciation in AY 2011-12 and that all material facts were disclosed for assessment.

7. The petitioner's actions of carrying forward and setting off unabsorbed depreciation were supported by a judgment of the Coordinate Bench of the Court.

8. The Court noted the failure of the revenue to file a counter-affidavit despite the notice issued in 2018 and declined to grant further time.

9. After hearing both parties, the Court accepted the submissions made by the petitioner's counsel.

10. The reasons furnished by the AO for triggering the reassessment proceeding did not mention any failure to disclose material facts necessary for assessment.

11. The Court concluded that the impugned notice and order should be set aside, and the writ petition was disposed of accordingly.