2008 (7) TMI 501 - HC - Income Tax

Reassessment notice limitation - it is not even the case of the Revenue that there was any omission or failure on part of the petitioner-assessee to disclose fully and truly all material facts relevant for the assessment of the assessment year in question. In fact the statement showing computation of total income, it becomes clear that all relevant details for computing long-term capital gains have been shown by the petitioner-assessee. Not only that, details of exemption claimed under section 54 of the Act in respect of investment in the new house have also been shown on a separate sheet. Therefore, it is apparent that there is no omission or failure on the part of the petitioner-assessee as required by provisions of the proviso to section 147 of the Act. Hence, the impugned notice dated March 22, 1999, issued under section 148 of the Act, which is admittedly issued beyond a period of four years, i.e., March 31, 1997, is bad in law and without jurisdiction. Accordingly, notice under section 148 of the Act dated March 22, 1999, is hereby quashed and set aside.

Summary

Issues:
1. Challenge to notice issued under section 148 of the Income-tax Act, 1961 for assessment year 1992-93.
2. Validity of the impugned notice issued beyond the four-year period from the relevant assessment year.
3. Requirement of the Revenue to establish omission or failure to disclose material facts for reassessment.

Analysis:
1. The petitioner challenged the notice issued under section 148 of the Income-tax Act, 1961 for the assessment year 1992-93. The petitioner had filed a return of income declaring total income, and the Assessing Officer issued a notice under section 143(2) of the Act. The assessment order was framed, and the petitioner responded with details of the amount invested in a new house. The impugned notice dated March 22, 1999, was challenged on the ground that it was issued beyond the four-year period from the end of the relevant assessment year.

2. Section 147 of the Act allows for reopening a completed assessment if income liable to tax has escaped assessment. The proviso under this section imposes conditions on the Revenue, shifting the burden if four years have elapsed from the relevant assessment year. In this case, the conditions regarding non-filing of return and non-response to statutory notice were not applicable. The crucial third condition required the Revenue to establish any omission or failure by the petitioner to disclose material facts relevant for assessment.

3. The reasons recorded for issuing the notice highlighted a discrepancy in the exemption claimed under section 54, resulting in underassessment of income. However, upon review, it was evident that the petitioner had provided all relevant details for computing long-term capital gains and had disclosed the exemption claimed for investment in a new house. The court found that there was no omission or failure on the part of the petitioner to disclose material facts as required by the proviso to section 147 of the Act.

4. Considering the facts and circumstances of the case, the court held that the impugned notice issued beyond the four-year period was without jurisdiction and quashed it. The petition was allowed, and there was no order as to costs.