2024 (7) TMI 1095 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - reasons to believe Notice issued beyond four years - there was unclaimed TDS - HELD THAT - As explained that the petitioner had not considered TDS credit corresponding to interest income which was transferred to Salasar Agropanel Pvt. Ltd. The petitioner also placed on record acknowledgment of return of income filed by the said company with computation of income and ledger of interest income on security deposit. From the perusal of the reasons, it is apparent that the AO on the same material has arrived at a reason to believe that the income has escaped assessment though the petitioner has explained the same during the regular assessment proceedings and there is no failure on part of the petitioner to fully and truly disclose all material facts during the assessment for the year under consideration. It is a mere change of opinion on part of the AO and the impugned notice is without jurisdiction and also hit by the Proviso to Section 147 of the Act. Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-16 beyond the prescribed period.

Analysis:
The petitioner filed a return of income for A.Y. 2015-16 and claimed TDS credit. The assessment order was passed under Section 143 (3) of the Act. During assessment proceedings, unclaimed TDS was found, and the petitioner provided explanations regarding the difference in TDS credit. The impugned notice under Section 148 was issued after four years, alleging that the petitioner understated income due to unclaimed TDS. Reasons for re-opening were provided, indicating the alleged income escapement. The court noted that the Assessing Officer's reason to believe income escapement was based on the same material already disclosed during regular assessment. It was concluded that the notice was a mere change of opinion and lacked jurisdiction, thus quashing the notice.

This judgment revolves around the challenge to a notice issued under Section 148 of the Income Tax Act for the Assessment Year 2015-16 beyond the prescribed period. The petitioner had filed returns and undergone scrutiny assessment, addressing queries regarding unclaimed TDS during the process. The reasons for re-opening cited the alleged understatement of income due to unclaimed TDS, leading to the issuance of the impugned notice. However, the court found that the Assessing Officer's belief of income escapement was based on information already disclosed during the regular assessment, deeming the notice a mere change of opinion without jurisdiction. Consequently, the court quashed the notice, emphasizing the lack of failure on the petitioner's part to fully disclose material facts during the initial assessment.