2016 (4) TMI 815 - HC - Income Tax

Validity of reopening of assessment - reasons recorded - Held that - The impugned notice under section 148 of the Act has been issued on 25.03.2015 for reopening the assessment for assessment year 2008-09, which is clearly beyond a period of four years from the end of the relevant assessment year. On a perusal of the reasons recorded it is amply clear that there is nothing stated therein to the effect that there was any failure on the part of the petitioner to disclose fully and truly all material facts. Thus, the second condition precedent for exercise of powers under section 147 of the Act is clearly not satisfied. Moreover, even as regards the first condition, namely, that the Assessing Officer should record satisfaction that income chargeable to tax should have escaped assessment, in the light of the reasons recorded by this court in the case of Shri Chalthan Vibhag Khand Udhyog Sahakari Mandali Ltd. v. Deputy Commissioner of Income Tax (2015 (7) TMI 297 - GUJARAT HIGH COURT ), it cannot be said that on the reasons recorded for reopening the assessment, the Assessing Officer could have formed the belief that income chargeable to tax has escaped assessment. Therefore, even the first condition precedent for exercise of powers under section 147 of the Act, is not satisfied. Under the circumstances, the impugned notice issued under section 148 of the Act cannot be sustained. - Decided in favour of assessee

Summary

Issues:
Challenge to notice under section 148 of the Income Tax Act, 1961 for assessment year 2008-09.

Analysis:
The petitioner, a Cooperative Society manufacturing sugar, challenged a notice issued under section 148 of the Income Tax Act, 1961, seeking to reopen their assessment for the year 2008-09. The petitioner contended that the reasons for reopening were identical to a previous case where the court had set aside a similar notice due to lack of jurisdiction and failure to disclose material facts. The petitioner argued that the notice was beyond the four-year period and did not satisfy the conditions for reopening assessments. The court noted that the reasons for reopening were insufficient and did not establish that income had escaped assessment due to the petitioner's failure to disclose material facts. The court found that the notice under section 148 could not be sustained as it did not meet the necessary conditions. Consequently, the court allowed the petition, quashing and setting aside the impugned notice issued by the respondent.

This judgment highlights the importance of satisfying the conditions precedent for reopening assessments under section 147 of the Income Tax Act, 1961. It emphasizes the necessity of demonstrating that income has escaped assessment due to the assessee's failure to disclose material facts. The court's decision underscores the significance of adhering to legal requirements and ensuring that the jurisdiction is properly exercised in such matters.