2021 (10) TMI 796 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - whether no failure to truly and fully disclose material facts and in any case, it was a mere case of change of opinion and there was no fresh tangible material for initiating reassessment proceedings? - HELD THAT - In the present case there is no failure on the part of the assessee to truly and fully, disclose all primary facts necessary for the purpose of assessment. It cannot be stated that the condition precedent to the reopening of the assessment beyond the period of four years has been fulfilled. As only as an attempt to take the case out of the restrictions imposed by the proviso to Section 147 of the Act. The other reason given in the reason for reopening of the assessment is that the assessee had shown 35 constructed units valuing as on 31.03.2012. However, no income under the head income from House Property has been offered by the assessee during the year under consideration. This reason is not mentioned in the reasons to believe that the income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. Thus, this reason too cannot be considering as fulfilling the condition precedent to the reopening of assessment beyond the period of four years as per the applicable proviso to Section 147 of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening assessment under Section 147/148 of the Income Tax Act.
2. Requirement of full and true disclosure of material facts by the assessee.
3. Jurisdictional conditions for reopening assessment after four years.

Detailed Analysis:

1. Validity of Reopening Assessment under Section 147/148:
The petitioner, engaged in real estate development, filed its annual returns for the assessment year 2012-13 and was subjected to scrutiny assessment. The Assessing Officer (AO) issued a notice on 26.03.2019 under Section 148, stating a belief that income chargeable to tax had escaped assessment. The petitioner responded by filing objections, arguing that there was no failure to disclose material facts and that it was a mere change of opinion without fresh tangible material. The AO rejected these objections, asserting that the reassessment was justified under Section 147 due to the incorrect claim of deduction under Section 57 of the Act.

2. Requirement of Full and True Disclosure of Material Facts:
The petitioner contended that all material facts were fully and truly disclosed during the original assessment, and the reassessment was based on a change of opinion. The court referred to the case of Ananta Landmark Pvt. Ltd., where similar notices and orders were quashed, emphasizing that the petitioner had disclosed all material facts and the AO had carefully scrutinized these during the original assessment. The court noted that the AO relied on the audited accounts for reopening, without indicating any specific undisclosed facts, thereby supporting the petitioner's claim of full disclosure.

3. Jurisdictional Conditions for Reopening Assessment After Four Years:
The court highlighted the legal requirement that, after four years, the AO must demonstrate tangible material indicating a failure to disclose fully and truly all material facts necessary for assessment. The court cited the Supreme Court's ruling in Calcutta Discount Co. Ltd., which established that the duty of the assessee is to disclose all primary facts, but not to draw inferences from them. The court found that the AO's reasons for reopening did not specify any undisclosed material facts, thus failing to meet the jurisdictional conditions for reopening beyond four years.

Conclusion:
The court concluded that the AO's reasons for reopening the assessment were based on a change of opinion rather than on any failure to disclose material facts by the petitioner. Consequently, the notice dated 26.03.2019 and the order dated 30.09.2019 were quashed and set aside, and the petition was allowed with no order as to costs.