2013 (7) TMI 320 - HC - Income Tax

Reassessment u/s 147 - True and full disclosure of facts - Appellate authority held reassessment not valid since no new information brought on record - Held that - it is a case in which after filing of the return by the assessee the matter was scrutinized and on thorough examination of the facts, the initial assessment order was passed. On the basis of same set of facts, if the assessing officer was of the view that it was a case of escaped assessment, then it was a case of change of opinion and not a case for reassessment - there was no new material before the assessing officer to record a finding that on the basis of some new material, he had formed an opinion that it was a case of escaped assessment and the assessee had not disclosed the fact truly and rightly - No substantial question of law involved - Decided against Revenue.

Summary

Issues:
1. Validity of reassessment under section 147 of the Income Tax Act.
2. Disclosure of material facts by the assessee in the return.
3. Interpretation of section 115JB of the Act regarding adjustment of unabsorbed depreciation.

Analysis:

1. Validity of reassessment under section 147 of the Income Tax Act:
The case involved appeals by the Revenue against orders setting aside assessment orders under section 147/143(3) of the Income Tax Act. The assessing officer had issued a notice under Section 148 for reassessment based on the belief that the assessee had not disclosed income correctly and wrongly claimed depreciation adjustment. The Commissioner of Income Tax (Appeals) found that the reassessment could only be done if there was falsity in the return and no true and full disclosure of facts. It was concluded that the income was correctly disclosed by the assessee, and the notice under section 148 was not justified. The Income Tax Appellate Tribunal also held that the initiation of proceedings under section 148 was not justified, as there was no error in the calculation of the assessee.

2. Disclosure of material facts by the assessee in the return:
The appellate authority and the Tribunal found that the assessing officer had all material facts before passing the initial assessment order. It was noted that there was no new material presented to form an opinion of escaped assessment, indicating a case of change of opinion rather than a reassessment requirement. The Tribunal emphasized that the assessee had disclosed all material facts, and there was no justification for the reassessment under section 147(b) of the Act.

3. Interpretation of section 115JB of the Act regarding adjustment of unabsorbed depreciation:
The Tribunal referred to sub-section (5) of section 115JB, stating that all provisions of the Act apply to every assessee being a company under that section. It relied on a judgment to determine that the assessee correctly reduced unabsorbed depreciation, and there was no error in the calculation. The Tribunal dismissed the appeal by the Revenue, emphasizing that the calculation was accurate and not a case of escapement of income.

In conclusion, the High Court dismissed the appeals by the Revenue, stating that there were no substantial questions of law involved. The Court found that the reassessment was not justified, as there was no new material to support the claim of escaped assessment. The decision highlighted the importance of full disclosure of material facts by the assessee and the correct interpretation of provisions such as section 115JB of the Income Tax Act.