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TMI Blog2025 (3) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147, no action can be taken for reopening after four years unless the AO has reason to believe that income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
Since in the case before us in the reasons recorded there is nothing to indicate that reopening is sought on the ground of the failure on the part of the petitioner to disclose fully and truly material facts, the initiation of re-assessment proceedings u/s 147 of the Act cannot be sustained and is, therefore, held to be bad in law. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and on the facts and circumstances prevailing in the case and as per provisions and scheme of the Income-tax Act, 1961 ('the Act') it be held that the re-assessment proceeding completed are invalid, since Ld. AO failed to provide copy of 'reasons to believe' during the course of re- assessment proceedings. Accordingly, the re- assessment proceeding so completed be kindly quashed and appropriate relief be granted in this regard. 3. Without prejudice to other grounds, and on the facts and circumstances prevailing in the case and as per provisions and scheme of the Income-tax Act, 1961 ('the Act') it be held that the re- assessment proceeding completed are invalid, since the same has been completed without granting an opportunity of being heard through Virtual Conference, leading to gross violation of principle of natural justice. Accordingly, the re- assessment proceeding so completed be kindly quashed and appropriate relief be granted in this regard. 3. The relevant facts are in brief that in the present case the reassessment proceedings were initiated and assessment was framed under Section 147 read with Section 144B of the Act vide Assessment Order, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiry of almost five years, the reassessment proceedings were initiated in the case of the Appellant on the basis of assessment framed on the Appellant for the Assessment Year 2015-2016 vide Assessment Order dated 30/12/2017. It was vehemently contended that the reassessment proceedings were initiated in the case of Appellant only on account of change of opinion and in absence of any tangible material to form the belief that income had escaped assessment. It was further submitted that there was no failure on the part of the Appellant to disclose facts relevant for framing assessment. The Assessing Officer has failed to specify any default committed by the Appellant in disclosing true and full facts during the assessment proceedings. Reliance in this regard was placed on the judgment of the Hon'ble Bombay High Court in the case of IPCA Laboratories Ltd. Vs. DCIT [2002] 124 Taxman 556 (Bombay) as well as decision of the Tribunal in Appellant's own case for the Assessment Year 2013-2014 [ITA No.4010/Mum/2024, dated 28/11/2024]. 7. Per contra the Learned Departmental Representative vehemently submitted that the Assessing Officer did not form any opinion on the issue under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The case was selected for Scrutiny as per norms of CASS. The assessment was completed under Section 143(3) of the I.T, Act, 1961 on 04.07.2016 with assessed income at Rs. Nil. 3. It is also seen that the return of income filed by the assessee trust for A.Y.2015-16 was selected for scrutiny and assessment was finalized on 30/12/2017. During the scrutiny proceedings, it was noticed that payment made to Shri Deepak More towards car hire charges were disallowed being unjustified and unwarranted as car was never given on rent to the assessee trust and in violation of the fiduciary relation between trust and trustee in guise of leasing of car. Thus, in view of facts of the case for the Assessment Year 2015-16 and provisions of section 13(1)(c) of the Act, car hire charges of Rs. 4,80,000/- paid to Shri Deepak More by the assessee trust during the Assessment Year 2014-15 is also violation of fiduciary relation between trust and trustee and thereby reduced its taxable income. Therefore, the income chargeable to tax for the Assessment Year 2014-15 has been under assessed." (Emphasis Supplied) 11. Thus, the only reason stated in the reasons recorded for re-opening assessment for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case, although an assessment was made under section 143(3) earlier, the income has been made the subject of excessive relief and, therefore, the deeming provision of Explanation 2 would apply. It was also urged that under section 149 assessment can be reopened even after four years if the income escaping assessment is of a specified amount. In this connection, reliance was placed on section 149(1)(a)(ii) of the Act. Findings : 5. We find merit in this petition. We are confining this judgment to the facts of the case. In the present case, the period of four years came to an end on 31-3-1997. In the present case, an affidavit has been filed on behalf of the department. In the present case, it is the case of the department in the affidavit that the predecessor of the respondent No. 1 had passed an order of assessment under section 143(3) on 31-3-1995, computing the total income of the assessee at Rs. 2.86 crores (approx.). That, subsequently, another predecessor in office of the respondent No. 1 formed an opinion that the income chargeable to tax had escaped assessment. This was on 16-3-1999. We have gone through the reasons. The position of law after 1-4-1989, is not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book]. It is admitted position that re-assessment proceedings have been initiated in the present case after the expiry of 4 years from the end of the relevant assessment year. As per Proviso to Section 147 of the Act, no action can be taken for reopening assessment after the expiry of four years from the end of the relevant assessment year unless the Assessing Officer has reason to believe that income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Since in the reasons recorded for reopening assessment for the Assessment Year 2014-2015 there is nothing to indicate that reopening is sought on the ground of the failure on the part of the Appellant to disclose fully and truly material facts necessary for framing assessment, the initiation of re-assessment proceedings under Section 147 of the Act cannot be sustained and is, therefore, held to be bad in law. Accordingly, Assessment Order, dated 21/03/2022, passed under Section 147 read with Section 144B of the Act is quashed and consequently additions/disallowances made in the hands of the Appellant stand deleted. Thus, Additional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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