2011 (1) TMI 1032 - HC - Income Tax

Re-opening of assessment - Validity of notice - Held that - As it is apparent that in so far as the assessment years 1991-92 to 1995-96 are concerned, the impugned notices under section 148 have been issued on May 30, 2001 and as such are clearly beyond the period of four years from the end of the relevant assessment year - in the absence of any failure on the part of the petitioner to dis-close fully and truly all material facts necessary for its assessment. As regards the assessment years 1996-97 to 1998-99 - Held that - In the circumstances, the decision of Gujarat State Co-operative Bank Ltd. v. CIT 2000 (11) TMI 45 - GUJARAT High Court 250 ITR 229 (Guj) for the purpose of arriving at the opinion that income has escaped assessment has been reversed by the decision of Gujarat State Co-operative Bank Ltd. v. CIT 2001 (8) TMI 15 - SUPREME Court which forms the basis for reopening of assessment, itself is no longer good law and as such the very substratum for reopening the assessment falls - In favour of assessee.

Issues:
1. Challenge to notices issued under section 148 of the Income-tax Act, 1961 for reopening assessments for multiple years.
2. Validity of reopening assessments beyond the four-year period.
3. Failure to disclose material facts for assessment.
4. Reliance on a decision subsequently reversed by the Supreme Court for reopening assessments.
5. Interpretation of statutory reserves under section 80P(2)(a)(i) of the Act.

Analysis:
1. The petitioner, a co-operative bank, challenged notices issued under section 148 of the Income-tax Act, 1961, seeking to reopen assessments for the years 1991-92 to 1998-99 on the grounds of income escaping assessment.

2. The petitioner contested that for the years 1991-92 to 1995-96, the notices issued in 2001 were beyond the four-year period from the end of the relevant assessment year. The court held that jurisdiction under section 147 requires a failure to disclose material facts, which was not established in this case, rendering the reopening invalid for these years.

3. Regarding the years 1996-97 to 1998-99, although the notices were within the four-year period, the Assessing Officer relied on a High Court decision subsequently overturned by the Supreme Court. The court noted that the basis for reopening assessments was no longer valid, as the decision in question was no longer good law, leading to the quashing of the notices.

4. The court emphasized that the decision of the High Court, forming the basis for reopening assessments, was no longer valid, and the reliance on it was unjustified. Additionally, the court highlighted the interpretation of statutory reserves under section 80P(2)(a)(i) of the Act, indicating that the earlier decision was overruled by the Supreme Court, further invalidating the grounds for reopening assessments.

5. Consequently, the court allowed the petition, quashing the impugned notices dated May 30, 2001, and setting aside the reopening of assessments for the mentioned years, with no costs imposed on the petitioner.

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