2005 (9) TMI 48 - HC - Income Tax

Notice u/s 148 - impugned notice is admittedly beyond the period of limitation prescribed under the proviso to section 147 of the Act and in the absence of any material to show that there was failure on the part of the assessee to disclose fully and truly all materials, such notice must be held to be barred by limitation. The same is, therefore, liable to be quashed and set aside. On this ground alone the petition succeeds.

Summary

Issues:
Challenge to notice for reopening assessment under section 148 of the Income-tax Act, 1961 for the assessment year 1998-99.

Analysis:
The petitioner, a co-operative society, challenged a notice issued by respondent No. 1 for reopening assessment for the assessment year 1998-99 under section 148 of the Income-tax Act, 1961. The petitioner had previously filed its return of income and complied with all details requested by the Assessing Officer. However, respondent No. 1 sought to reopen the assessment based on certain provisions made by the petitioner regarding the purchase of milk. The petitioner requested reasons for reopening, which were eventually disclosed by the respondents.

Rival Contentions:
The petitioner argued that the notice under section 148 was time-barred and lacked justification as all relevant information had been disclosed during the initial assessment. The petitioner cited judgments supporting their stance. On the other hand, the Revenue representative suggested that the petitioner should utilize alternate remedies and raise objections before the Assessing Officer. He relied on a Supreme Court judgment to support his argument.

Consideration:
The court focused on whether there was a failure on the part of the assessee to disclose all material facts necessary for assessment. Citing previous judgments, the court emphasized that reasons for reopening assessments should be clear, unambiguous, and based on evidence. The court found that the impugned notice was beyond the limitation period and lacked evidence of failure to disclose material facts. Therefore, the notice was held to be barred by limitation and was quashed. The court did not delve into other contentions raised by the petitioner as the case succeeded on this ground alone.

Conclusion:
The High Court quashed and set aside the notice dated March 31, 2005, issued under section 148 of the Income-tax Act, 1961. The petition was allowed, and the rule was made absolute with no order as to costs.