2014 (12) TMI 607 - HC - Income Tax

Validity of notice for reopening of assessment u/s 148 Held that - The assessment is sought to be re-opened beyond a period of 4 years of the relevant AY - the material which was impounded during the course of the survey operation u/s 133-A was after the order of assessment was passed - This furnished a valid basis to reopen the assessment u/s 148 - it cannot be said that the reasons, on the basis of which re-assessment is sought, constitute a mere change of opinion - There was, indeed, a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment thus, the jurisdictional requirement for reopening the assessment has been duly fulfilled the order of the Tribunal is upheld Decided against assessee.

Issues:
1. Legality of notice issued under Section 148 of the Income Tax Act, 1961 for re-opening assessment for AY 2008-09.
2. Nature of receipts under security deposits and sale proceeds not fully disclosed during assessment.
3. Re-opening assessment beyond four years under Section 147 of the Income Tax Act, 1961.
4. Failure to disclose all material facts necessary for assessment.

Analysis:
1. The petitioner challenged the legality of the notice issued under Section 148 of the Income Tax Act, seeking to re-open the assessment for AY 2008-09. The Assessing Officer completed the assessment under Section 143(3) reflecting a total loss of Rs. 84,28,215. The notice under Section 147 was issued due to the supplementary agreements changing the nature of receipts from being refundable to non-refundable, making them taxable in the assessment year 2008-09. The Assessing Officer found discrepancies in the disclosure of non-refundable security deposits and sale proceeds during the assessment proceedings.

2. The assessment was sought to be re-opened beyond four years, invoking the proviso to Section 147 of the Income Tax Act, which requires the assessee to fully and truly disclose all material facts necessary for assessment. The reasons provided by the Assessing Officer indicated that the jurisdictional requirement for re-opening the assessment had been met, as there was a failure to disclose the change in nature of receipts from security deposits.

3. The court found that the impounded material post-assessment provided a valid basis for re-opening the assessment under Section 148. It was noted that there was no mere change of opinion, but a failure on the part of the assessee to fully disclose all material facts necessary for assessment, fulfilling the jurisdictional requirement for re-opening the assessment beyond four years.

4. The court dismissed the writ petition, stating that there was no substance in the petitioner's claims. It was concluded that the reasons provided for re-assessment were valid, as there was a failure to fully and truly disclose all material facts necessary for assessment. Therefore, the jurisdictional requirement for re-opening the assessment had been met, leading to the dismissal of the petition.

This comprehensive analysis covers the legality of the notice issued, the non-disclosure of material facts during assessment, the re-opening of assessment beyond four years, and the failure to fully disclose necessary information for assessment.

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