2014 (11) TMI 893 - HC - Income Tax

Validity of notice for reopening of assessment u/s 148 Proper examination made by AO Change of opinion - Held that - The notice was issued beyond the period of 4 years from the end of the relevant AY i.e. A.Y. 2000-01 - in the computation of income the petitioner had specifically put in a note that the claim of exemption u/s 10(33) of the Act on the dividend income of ₹ 2.28 crores is made assessee had fully and truly disclosed all the facts relevant to assessment viz. that it was in business of trading in shares and securities as well as the fact that the dividend received by them is claimed as exempted u/s 10(33) there was no reason which indicates any failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment - there was a clear examination done by the AO of the nature of the dividend being claimed to be exempt u/s 10(33) of the Act. Therefore, the impugned notice is bad as it proceeds on a clear change of opinion - non disposal of rectification application u/s 154 of the Act is inexplicable for over 10 years and no explanation is forth coming thus, the Revenue has given up/withdrawn its claim for rectification in view of the proceedings for reopening of assessment thus, the notice uis set aside Decided in favour of assessee.

Issues:
1. Reopening of assessment under Section 148 of the Income Tax Act, 1961 for Assessment Year 2000-01 based on dividend income exemption.
2. Jurisdictional validity of the notice issued beyond the four-year period from the end of the relevant assessment year.
3. Assessment proceedings and claim of exemption under Section 10(33) of the Act.
4. Challenge to the impugned notice on grounds of full disclosure, change of opinion, and lack of jurisdiction.
5. Examination of the impugned notice and reasons for reopening assessment.
6. Legal principles governing the jurisdiction to reopen an assessment.

Detailed Analysis:

1. The judgment pertains to the challenge against a notice issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for Assessment Year 2000-01 based on the petitioner's dividend income exemption claim. The petitioner had filed its return of income declaring total income, accompanied by audited financial statements indicating dividend income and stock trading details.

2. The jurisdictional validity of the notice issued beyond the four-year period from the end of the relevant assessment year was questioned. The court emphasized the requirement of failure to fully and truly disclose all material facts necessary for assessment to establish jurisdiction for reopening an assessment beyond the prescribed period.

3. The assessment proceedings and the petitioner's claim of exemption under Section 10(33) of the Act were thoroughly examined. The court highlighted the petitioner's disclosure of relevant facts during the assessment process, including details of dividend income, stock trading activities, and the nature of business as a trader in shares and securities.

4. The challenge to the impugned notice was based on grounds of full disclosure, change of opinion, and lack of jurisdiction. The petitioner objected to the notice citing proper disclosure during the assessment, the Assessing Officer's consideration of the exemption claim, and the absence of valid reasons to believe that income had escaped assessment.

5. The examination of the impugned notice and reasons for reopening the assessment revealed discrepancies in the Assessing Officer's justification for initiating the reassessment process. The court found that the notice lacked valid reasons indicating any failure on the petitioner's part to disclose material facts necessary for assessment.

6. The judgment delved into the legal principles governing the jurisdiction to reopen an assessment, emphasizing that a mere change of opinion or reevaluation of issues already considered during regular assessment proceedings does not warrant reopening. The court highlighted the importance of full and true disclosure of material facts by the assessee to establish the Assessing Officer's jurisdiction.

This comprehensive analysis of the judgment showcases the detailed examination of various legal aspects and factual circumstances surrounding the reassessment notice issued by the Assessing Officer.

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