2003 (4) TMI 503 - AT - Income Tax

Summary

Issues:
Validity of re-opening of assessment under section 147.

Analysis:
The appeal was against the order of the CIT(Appeals)-III, Surat, regarding the validity of re-opening of assessment under section 147. The appellant contended that all material facts were disclosed in the original assessment, making the re-opening impermissible after four years from the end of the relevant assessment year as per the proviso to section 147. The original assessment under section 143(3) was completed on 2-3-1994, and the notice under section 148 was issued on 23-11-1998 for the assessment year 1992-93. The proviso to section 147 restricts re-opening after four years unless there was a failure to disclose material facts. The Assessing Officer noted that the assessee had disclosed all relevant details in the original return, including the absence of manufacturing and trading operations, interest income, and pre-operative expenditure adjustments. It was concluded that there was no failure on the part of the assessee to disclose material facts necessary for assessment, and thus, the re-opening of assessment under section 147 was time-barred. Consequently, the order passed by the Assessing Officer under section 147 was quashed, restoring the original assessment order dated 2-3-1994.

In summary, the judgment focused on the interpretation of the proviso to section 147 concerning the re-opening of assessment beyond four years from the end of the relevant assessment year. The Assessing Officer's findings indicated that the assessee had fully and truly disclosed all material facts in the original return, negating any failure on the part of the assessee in furnishing necessary information for assessment. As a result, the re-opening of assessment under section 147 was deemed barred by limitation, leading to the allowance of the assessee's appeal and the restoration of the original assessment order.