2019 (7) TMI 806 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of reasons to believe - notice issues beyond period of four years - HELD THAT - Initiation of reassessment proceedings under Section 143(3) of the Act had been made beyond the period of four years by issuing notice under Section 148 of the Act without any allegation that the income chargeable to tax had escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that assessment year. The Tribunal while concurring findings recorded by the CIT(A) clearly held that the initiation of reassessment proceedings under Section 147 of the Act was bad in law. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 147 of the Income Tax Act, 1961 regarding reassessment proceedings initiated beyond four years.
2. Validity of the decision of the Income Tax Appellate Tribunal in quashing the proceedings initiated under Section 147 of the Act.

Analysis:
1. The Tax Appeal under Section 260A of the Income Tax Act, 1961 was filed by the Revenue against the order passed by the Income Tax Appellate Tribunal, Rajkot Bench, for the assessment year 2005-06. The main question raised was whether the Tribunal erred in upholding the decision of the CIT(A) in quashing the proceedings initiated under Section 147 of the Act beyond the prescribed time limit of four years. The Tribunal found that the reassessment proceedings were initiated beyond the four-year period without any clear finding that income had escaped assessment due to the assessee's failure to disclose material facts necessary for assessment.

2. The Tribunal concurred with the CIT(A)'s findings that the initiation of reassessment proceedings under Section 147 of the Act was legally flawed. It was noted that the notice under Section 148 was issued without alleging any escapement of income due to the assessee's failure to disclose material facts. The Tribunal upheld the CIT(A)'s decision to quash the initiation of reassessment proceedings and all subsequent proceedings. The High Court, considering the concurrent findings of the Revenue authorities, declined to interfere with the Tribunal's order. It was concluded that no error of law was committed by the Tribunal in dismissing the appeal, thereby affirming the decision to quash the reassessment proceedings.

In summary, the High Court upheld the decision of the Income Tax Appellate Tribunal in quashing the reassessment proceedings initiated beyond the statutory limit of four years under Section 147 of the Income Tax Act, 1961. The Court found no error in the Tribunal's decision, leading to the dismissal of the Tax Appeal filed by the Revenue.