2006 (1) TMI 177 - AT - Income Tax

Summary

Issues:
Challenge to jurisdiction under section 147 based on limitation period and change of opinion.

Analysis:
1. The appeal challenges the order of CIT(A)-XX, Mumbai, for the assessment year 1989-90, completed under section 143(3) read with section 147 of the IT Act.
2. The additional grounds raised by the assessee pertain to the jurisdiction assumed under section 147, questioning the legality of the notice issued beyond the limitation period and based on a pure change of opinion on previously considered issues.
3. The assessee argued that the notice issued under section 148 was beyond the limitation period as there was no concealment or furnishing inaccurate particulars of income, and all material facts were fully disclosed during the regular assessment under section 143(3).
4. The Departmental Representative objected to admitting the additional ground, arguing that it should have been raised earlier and that the CIT(A) had already adjudicated against the assessee on the issue of change of opinion.
5. The Tribunal held that the ground raised by the assessee regarding the jurisdiction under section 147 being beyond limitation is a legal ground, and the failure to challenge the notice before the AO or CIT(A) does not bar raising the issue before the Tribunal.
6. The Tribunal clarified that the Explanation 1 of section 147, regarding disclosure of material facts, cannot be used by the AO to assume jurisdiction, especially when the information was disclosed in the trading account, P&L account, and balance sheet filed along with the return as required by law.
7. The Tribunal emphasized that for the AO to assume jurisdiction beyond four years from the assessment year, there must be a failure on the part of the assessee to fully and truly disclose all necessary facts for assessment, and the issue of failure to disclose material facts needs further adjudication by the CIT(A).
8. Consequently, the Tribunal allowed the appeal for statistical purposes, restoring the matter back to the CIT(A) for fresh adjudication on the legal issue of failure to disclose material facts, and directed all other grounds to be reconsidered after deciding the legal issue.