2011 (1) TMI 1037 - HC - Income Tax

Reopening of assessment - beyond a period of four years from the end of the relevant assessment year - Held that - No failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration, facts of the present case would stand squarely covered by the decision of this court in the case of CIT v. Bipin Vadilal (1999 (4) TMI 77 - GUJARAT High Court) inasmuch as the belief as to escapement of income chargeable to tax from assessment was not entertained by the Assessing Officer on the ground that there had been failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment and as such, no proceedings could have been initiated under section 148 after the expiry of a period of four years from the end of the relevant assessment year, assessment barred by limitation, assumption of jurisdiction by the Assessing Officer itself is invalid, petition succeeds and is accordingly allowed.

Summary

Issues:
Challenge to notice under section 148 of the Income-tax Act, 1961 for reopening assessment for the assessment year 1992-93 beyond the prescribed period.

Analysis:
1. The petitioner, a co-operative bank, challenged a notice dated January 12, 2001, issued under section 148 of the Income-tax Act, seeking to reopen its assessment for the assessment year 1992-93. The petitioner contended that the notice was illegal and contrary to law as it was issued beyond the four-year period from the end of the relevant assessment year without any failure on its part to disclose material facts necessary for assessment.

2. The respondent, in response to the petition, filed an affidavit-in-reply citing reasons for reopening the assessment. However, the affidavit did not address the petitioner's contention of lack of disclosure of material facts. The respondent argued that based on Supreme Court decisions, the earlier assessment needed reexamination, leading to the reopening of assessment.

3. The petitioner's senior advocate argued that the notice to reopen assessment lacked jurisdiction as it was initiated beyond the four-year period without any failure to disclose material facts. Referring to case law, it was contended that the reopening was unjustified. The advocate highlighted a subsequent Supreme Court decision that overruled the basis for the assessment reopening.

4. The respondent's senior advocate argued that the court should not intervene based on the affidavit-in-reply filed by the respondent.

5. The High Court noted that the notice to reopen assessment was issued on January 12, 2001, beyond the four-year period from the relevant assessment year. It was observed that there was no failure on the part of the petitioner to make a return or disclose material facts. The reasons for reopening were based on a subsequent decision of the High Court, without any mention of failure to disclose material facts. Referring to precedent, the court concluded that the reassessment proceedings were barred by limitation, rendering the assumption of jurisdiction by the Assessing Officer invalid.

6. Consequently, the High Court allowed the petition, quashing and setting aside the impugned notice dated January 12, 2001, issued under section 148 of the Income-tax Act. The court ruled in favor of the petitioner, holding that the notice could not be sustained due to the lack of jurisdiction.