2017 (1) TMI 316 - HC - Income Tax

Validity of reopening of assessment - reasons to believe - Held that - The reasons are bereft of any basis to come to the conclusion that the income chargeable to tax has escaped assessment nor any inference can be drawn therefrom that there was any failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment. Moreover, the petitioner in its objections to the reasons recorded pointed out that this is a case of mere change of opinion, as this very issue was the subject matter of inquiry during regular assessment proceedings as is evident from the Annexure-II to the notice dated 29th July, 2011 issued under Section 142(1) of the Act to the petitioner. The same was responded to by the petitioner by its communication dated 19th October, 2011. In the above view, the impugned notice prima facie appears to be without jurisdiction as it does not even remotely suggest that there was any failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment - Decided in favour of assessee

Summary

Issues involved:
Challenging notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for Assessment Year 2009-10 beyond the four-year period from the end of the relevant assessment year, requirement of first proviso of Section 147 regarding disclosure of all material facts necessary for assessment, reasons recorded for reopening assessment lacking basis, petitioner's objection of change of opinion during regular assessment proceedings.

Analysis:
The petition challenges a notice issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2009-10, which is beyond the four-year period from the end of the relevant assessment year. The regular assessment under Section 143(3) of the Act was already conducted by an order dated 16th December, 2011. The reopening notice must satisfy the requirement of the first proviso of Section 147, indicating a failure to disclose all material facts necessary for assessment leading to the previous order. The reasons recorded for reopening the assessment lack a basis for concluding that income chargeable to tax has escaped assessment, and there is no indication of any failure on the petitioner's part to disclose all necessary facts. The petitioner contends that this is a mere change of opinion, as the issue was already addressed during the regular assessment proceedings, as evidenced by previous communications.

The reasons provided for the reopening of the assessment do not establish any failure on the part of the petitioner to disclose all material facts necessary for assessment. The impugned notice appears to be without jurisdiction and seems to be a case of change of opinion, as the issue in question was already considered during the regular assessment proceedings. The lack of a valid basis for reopening the assessment and the absence of any indication of non-disclosure of material facts raise significant doubts about the legality and validity of the notice. Therefore, interim relief is granted in favor of the petitioner in light of these observations, pending further proceedings.