2005 (8) TMI 68 - HC - Income Tax

Notice under section 148 - Since the reopening is beyond the period of four years in the absence of any material to show that there is failure on the part of the assessee to disclose fully and truly all material facts the reopening of the assessment cannot be sustained - mere fact that a protective assessment has been made in the case of some other assessee on the ground that the income of that assessee is assessable in the hands of the assessee herein cannot be a ground to reopen the concluded assessment of the assessee - notices issued are without jurisdiction and the same are liable to be quashed and set aside

Summary

Issues:
Validity of notice under section 148 of the Income-tax Act, 1961 for reopening assessment for the assessment year 1985-86.

Analysis:
The High Court of BOMBAY delivered a judgment concerning the validity of a notice dated November 4, 1991, issued under section 148 of the Income-tax Act, 1961. The petitioner had filed its return for the assessment year 1985-86, and the assessment was completed by respondent No. 1 under section 143(3) of the Act, assessing the petitioner's negative income at Rs. 91,157. The impugned notice was issued to reopen the assessment based on the belief that the income had escaped assessment. The petitioner challenged the notice under article 226 of the Constitution of India, as reasons were not disclosed for reopening the assessment. The court considered the submissions made by both parties.

The petitioner's counsel argued that there was no material to justify the formation of belief for reopening, emphasizing the requirement for failure to disclose all material facts resulting in income escapement for reopening beyond four years. The counsel relied on various court judgments to support the argument, emphasizing the necessity for clear and unambiguous reasons recorded by the Assessing Officer. The respondent's counsel raised a preliminary objection regarding the maintainability of the writ petition due to the availability of alternate remedies.

The court observed that without communication of reasons, the petitioner could not have resorted to alternate remedies. The court noted that the reopening beyond four years lacked justification as there was no evidence of failure to disclose material facts by the assessee. The reasons for reopening did not indicate any such failure, and the mere existence of a protective assessment for another assessee was insufficient grounds for reopening the concluded assessment. Consequently, the court held that the notices issued were without jurisdiction and quashed them, setting aside the impugned notices.

In conclusion, the petition was allowed, and the impugned notices were quashed and set aside. The court made the rule absolute with no order as to costs.