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TMI Blog2023 (6) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax has escaped assessment. Also notice of reopening has been issued after the expiry of four years from the end of the relevant assessment year. U/s 148 where the notice has been issued after the expiry of four years from the end of the relevant assessment year, the onus is on the AO to show that income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year. There is not even a whisper in the reasons to believe that there was any such failure on the part of petitioner to disclose fully and truly all material facts necessary for its assessment. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 1995 before the Commissioner of Income Tax (Appeals) [hereinafter referred to as "CIT(A)"]. 5. Respondent no. 2 by exercising his powers of revision under Section 263 of the Act passed an order on 25th September 1997 revising the assessment order of respondent no. 1 on the ground that it was erroneous and prejudicial to the interest of Revenue since it omitted to charge petitioner's income tax at the rate of 65% instead of 60% tax rate actually charged by the Assessing Officer. This order was challenged by petitioner by filing an appeal on 3rd December 1997 before the Income Tax Appellate Tribunal [hereinafter referred to as "ITAT"]. 6. On 17th November 1997 respondent no. 1 gave effect to the revisionary order of CIT by applying the tax rate of 65% and directed respondent no. 2 to revise the entire income returned by petitioner. Against this order, an appeal was filed by petitioner before CIT(A) on 15th January 1998. 7. While these three appeals were pending, the Finance Act introduced the Kar Vivad Samadhan Scheme 1998 [hereinafter referred to as "the KVSS"]. The object of the KVSS was to declog the system of litigation by giving assessees an opportunity to settle finally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, viz., Form 3, was conclusive as to the matters stated therein and no matter covered thereby could be reopened in any other proceeding under any direct or indirect tax enactment or under any other law for the time being in force. 11. On 15th January 2000 petitioner received a notice dated 10th January 2000 from respondent no. 1 under Section 148 of the Act alleging that petitioner's income for Assessment Year 1992-1993 had escaped assessment and requiring petitioner to file a return of its income for the said Assessment Year within 30 days. Petitioner challenged the validity of the notice and called upon respondent no. 1 to furnish the reasons to believe recorded prior to issuance of the notice. Respondent no. 1 refused to provide the same and hence, petitioner approached this Court. 12. Mr. Pardiwalla submitted that the notice issued on 10th January 2000 has to be quashed and set aside for the following reasons : (a) once the assessment for the entire year was settled by following the provisions of the KVSS and the Designated Authority after application of mind had made an order under Section 90, which has been complied with by making payment of the tax computed under the KV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It would, therefore, follow that the reopening of the assessment for the same subject matter is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceeding and this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Mr. Pardiwalla concluded that on these grounds the notice has to be quashed and set aside. 13. Mr. Suresh Kumar for Revenue basically reiterated what is stated in the affidavit in reply of respondent no. 1. Of course, in fairness Mr. Suresh Kumar also submitted that in the affidavit in reply reliance has been placed on the judgment of the Bombay High Court in Killick Nixon Ltd. V/s. Deputy Commissioner of Income Tax, Mumbai and Ors. to submit that having filed a declaration under the KVSS, does not mean that there has to be a closure. But that is no more the position in law, the Apex Court having taken a view as explained below. 14. Mr. Suresh Kumar also submitted that there was misdec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance (No. 2) Act, 1998 and the KVSS, 1998 was issued certifying that the appellant had paid towards full and final settlement of the tax arrears determined in the order dated 19.1.1999 on the declaration made by the appellant and granting immunity consequent under the provisions of the Scheme. 6. By an order made on 16th August, 1999 purportedly under Section 142 (1) of the Act, the Assessing Officer called upon the appellant to furnish details in respect of Assessment Year 1992- 93 in connection with taxing of the licence fee of Rs. 24,12,114.00 received from the State Bank of India for let out portion of its property under the head "Income from House Property" as also to furnish evidence to establish that the written-off debts had become bad and have been written-off in the books of accounts. 7. The appellant protested by its letter dated 21st January, 2000 and pointed out that the assessment for the Assessment Year 1992-93 had obtained finality in view of the declaration under KVSS, the determination of the tax under the Scheme and the final certificate issued by the Designated Authority The Assessing Officer refused to accept it as final closure of the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after such determination towards full and final settlement of tax arrears;" xxx xxx xxx Section 94 -"For the removal of doubts, it is hereby declared that, save as otherwise expressly provided in subsection (3) of Section 90, nothing contained in this Scheme shall be construed as conferring any benefit, concession or immunity on the declarant in any assessment or proceedings other than those in relation to which the declaration has been made." 9. The Scheme of the KVSS is to cut short litigations pertaining to taxes which were frittering away the energy of the Revenue Department and to encourage litigants to come forward and pay up a reasonable amount of tax payable in accordance with the Scheme after declaration thereunder. 10. The learned Senior Counsel for the appellant contended that once the assessment for the entire year was settled by following the provisions of the Scheme and the Designated Authority after application of mind had made an order under Section 90, which was complied with by making payment of the tax computed under the Scheme. there was no question of reopening any issue which were subject matters of the Order of the Designated Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings, detailed reply has been furnished and has been dealt with in detail in the assessment order. Therefore, this reopening of assessment, in our view, is merely on the basis of change of opinion of the Assessing Officer and that does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. 17. We would also add that the notice of reopening has been issued after the expiry of four years from the end of the relevant assessment year. Under Section 148 of the Act, where the notice has been issued after the expiry of four years from the end of the relevant assessment year, the onus is on the Assessing Officer to show that income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year. There is not even a whisper in the reasons to believe that there was any such failure on the part of petitioner to disclose fully and truly all material facts necessary for its assessment. 18. In the circumstances, petition made absolute in terms of prayer clause - (a). 19. Petition accordingly stand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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