2021 (12) TMI 514 - HC - Income Tax

Reopening of assessment u/s 147 - Notice after expiry of four years - assessee company is showing its income of rent from shops under the head income from house property and income from other services mainly common area maintenance income, Electricity Income, Parking income etc. under the head income from business and profession - onus to prove that income chargeable to tax has escaped the assessment - HELD THAT - The figures and details are available not only in the return of income, profit and loss and balance sheet filed by petitioner but all these points have been raised and considered in the original assessment order passed. According to respondent no.1, independent field inquiries were conducted to verify the information as disclosed above. The details above are those details which were available in the profit and loss account and the balance sheet.Specimen agreement annexed to the petition indicate separate arrangement disclosed in the agreement. Agreements have also been provided to the Assessing Officer before the original assessment order was passed giving the break up as well. We are satisfied that petitioner had fully and truly disclosed all material facts necessary for the purpose of assessment which are wrongfully alleged as not disclosed fully and truly. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer. In the reasons for re-opening, the Assessing Officer has in fact relied upon the annual report and audited P L A/c and balance sheet and he admits various information/material were disclosed. But according to the new Assessing Officer, the fact that other service charges were inseparably connected to the letting out of the building of the assessee is not acceptable. When on consideration of material fact one view is exclusively taken by the Assessing Officer it would not be open to re-open the assessment based on the very same material with a view to take another view. - Decided in favour of assessee.

Summary

Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act 1961 for A.Y.-2012-2013.
2. Allegation of petitioner's income escaping assessment due to failure to disclose material facts.
3. Classification of income from house property and business and profession.
4. Assessment proceedings and submission of details by petitioner.
5. Re-opening of assessment based on change of opinion.

Analysis:
1. The High Court of Bombay examined the validity of a notice issued under Section 148 of the Income Tax Act 1961 for A.Y.-2012-2013. The petitioner challenged the notice and the order disposing of objections. The court noted that the notice was issued after the expiry of 4 years from the relevant assessment year and emphasized that the onus is on the respondents to demonstrate that the petitioner's income escaped assessment due to a failure to disclose material facts.

2. The court analyzed the reasons for re-opening provided to the petitioner and found that they did not establish any failure on the petitioner's part to fully disclose material facts. The petitioner, engaged in developing and running a shopping mall, had correctly classified income from license fees and common area maintenance charges under different heads for taxation purposes.

3. During the assessment proceedings, the petitioner diligently responded to notices and provided detailed information, including agreements and financial details. The Assessing Officer considered these submissions and passed an assessment order under Section 143(3) of the Act. The court highlighted that the original assessment order had already addressed the classification of income from house property and business and profession.

4. The court observed that the impugned notice was issued based on a change of opinion rather than a failure to disclose material facts. The Assessing Officer's contention that certain receipts should be part of income from house property only was not supported by the facts disclosed by the petitioner. The court emphasized that the petitioner had fully and truly disclosed all necessary material facts for assessment.

5. Ultimately, the court found in favor of the petitioner, holding that the impugned notice and order were unjustified. The court allowed the petitioner's plea, quashing the notice and order issued by the respondents. The judgment was delivered in accordance with the prayer clause seeking relief under Article 226 of the Constitution of India.