2013 (12) TMI 1004 - AT - Income Tax

Validity of reassessment u/s 147 Held that - The assessee has filed all the necessary details and material facts in the form of Audit Report in the return of income, with regard to the claim of deduction under Section 80HHC and also the computation of taxable income The assessment completed u/s 143(3) was reopened much after the expiry of four years from the end of the relevant assessment year - From the reasons recorded by the Assessing Officer it can be inferred that AO is withdrawing the deduction under Section 80HHC which was earlier allowed by the Assessing Officer The assessment already completed cannot be reopened for change of opinion - For acquiring a jurisdiction under Section 147, specifically in the cases where assessment has been completed under Section 143(3) the Assessing Officer has to categorically spell out the failure on the part of the assessee that he did not disclose fully and truly all material facts - The Assessing Officer has failed to record that there was any failure on the part of the assessee to disclose fully and truly all material facts Therefore reasons recorded do not allow him to reopen the completed assessment under Section 143(3), beyond the period of four years in view of the proviso to Section 147 Decided against Revenue.

Issues Involved:
1. Validity of reopening assessment proceedings under Section 147 of the Income Tax Act, 1961.
2. Compliance with the proviso to Section 147.
3. Alleged failure of the assessee to disclose fully and truly all material facts necessary for assessment.
4. Whether the reassessment proceedings were barred by limitation.

Detailed Analysis:

1. Validity of Reopening Assessment Proceedings under Section 147:
The revenue challenged the quashing of the assessment order passed under Section 143(3) read with Section 147. The main issue was whether the reopening of the assessment proceedings was valid. The assessee filed its return of income on 01.12.2003, and the assessment was completed under Section 143(3) on 28.02.2006. Subsequently, a rectification order under Section 154 was passed on 13.03.2006. The reassessment proceedings were initiated under Section 147 by issuing a notice under Section 148 on 29.03.2010, which was served after the expiry of four years from the end of the relevant assessment year.

2. Compliance with the Proviso to Section 147:
The assessee argued that the reopening was invalid as it was initiated after four years from the end of the relevant assessment year, and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The CIT(A) agreed with the assessee, stating that the Assessing Officer did not deal with this objection and did not mention any failure on the part of the assessee to disclose all material facts. The CIT(A) quashed the assessment order on the grounds of 'change of opinion' and the absence of failure on the part of the assessee to disclose material facts, making the reopening invalid beyond the period of four years.

3. Alleged Failure of the Assessee to Disclose Fully and Truly All Material Facts Necessary for Assessment:
The CIT(A) found that the necessary facts and figures were actively considered during the original and rectification proceedings, indicating no failure on the part of the assessee to disclose fully and truly all material facts. The CIT(A) cited several cases, including Hindustan Lever Ltd, to support the contention that reopening after four years without any failure on the part of the assessee to disclose material facts is not valid.

4. Whether the Reassessment Proceedings Were Barred by Limitation:
The reassessment proceedings were initiated beyond the four-year period stipulated in the proviso to Section 147. The CIT(A) held that the reopening was invalid as the Assessing Officer did not record any failure on the part of the assessee to disclose fully and truly all material facts. The Tribunal upheld the CIT(A)'s findings, stating that the Assessing Officer's reasons did not fulfill the conditions required to reopen the assessment beyond four years. The Tribunal emphasized that the duty of the assessee is limited to making full and true disclosure of all material facts necessary for the assessment, and it is the Assessing Officer's responsibility to determine the taxable income and compute the allowable deductions.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to quash the assessment order dated 08.12.2010 passed under Section 143(3) read with Section 147, as the reopening of the assessment was not valid. The appeal of the department was dismissed, and the order was pronounced in the open Court on 22nd March, 2013.

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