2023 (8) TMI 439 - AT - Income Tax

Reopening of assessment u/s 147 - reopening beyond 4 years - failure on the part of the assessee to disclose fully and truly all material facts or not? - HELD THAT - From the reasons recorded, there is no iota of thinking or words in the reasons recorded that there is any failure on the part of the assessee to disclose fully and truly all material facts relating to the income for the relevant assessment year. Admittedly the reopening is beyond 4 years because relevant assessment year involved is 2013-14 and notice u/s. 148 of the Act is issued on 29.03.2019, which means admittedly it is beyond 4 years. There is no failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment and assessment was completed originally u/s. 143(3) of the Act and admittedly the reopening is beyond 4 years because notice u/s. 148 of the Act was issued on 29.03.2019, no re-opening is possible. Thus we are of the view that reopening is beyond 4 years and as the original assessment was framed u/s. 143(3) of the Act, the Revenue could not establish any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment, the reopening in present case is bad in law. Decided in favour of assessee.

Summary

Issues Involved:
1. Assumption of jurisdiction under Section 148 of the Income Tax Act.
2. Reopening of assessment beyond four years.
3. Failure to disclose material facts by the assessee.

Summary:

Issue 1: Assumption of jurisdiction under Section 148 of the Income Tax Act
The first issue pertains to the assumption of jurisdiction under Section 148 by the Assessing Officer (AO) and its confirmation by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee argued that the reopening of assessment was beyond four years and there was no failure on its part to disclose fully and truly all material facts necessary for the assessment. The Tribunal noted that the CIT(A) did not adjudicate this jurisdictional issue and merely confirmed the addition of Rs. 3,93,01,801 as unexplained cash credits under Section 68.

Issue 2: Reopening of assessment beyond four years
The Tribunal highlighted that the original assessment was completed under Section 143(3) and the reopening was beyond four years from the end of the relevant assessment year (2013-14). The notice under Section 148 was issued on 29.03.2019. The Tribunal found that the AO did not point out any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal emphasized that as per the proviso to Section 147, no reopening is possible beyond four years unless there is a failure on the part of the assessee to disclose fully and truly all material facts.

Issue 3: Failure to disclose material facts by the assessee
The Tribunal observed that the AO was aware of the share application money received by the assessee during the original assessment proceedings, as the audited accounts were available. The Tribunal concluded that there was no failure on the part of the assessee to disclose material facts fully and truly. Citing the Supreme Court's decision in CIT vs. Foramer France, the Tribunal reiterated that the reopening was barred by limitation as there was no failure on the part of the assessee to disclose all material facts.

Conclusion:
The Tribunal quashed the reopening of the assessment as it was beyond four years and there was no failure on the part of the assessee to disclose fully and truly all material facts. Consequently, the appeal filed by the assessee was allowed, and the reassessment was deemed invalid. The Tribunal did not adjudicate the issues on merits due to the quashing of the reassessment. The order was pronounced in the open court on 14th July, 2023, at Chennai.