2011 (1) TMI 146 - HC - Income Tax

Reassessment - U/s 147 148 - As per the proviso to section 147 of the Income-tax Act 1961 the assessments beyond four years from the end of the relevant assessment year can be reopened only if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment Hence the notice issued under section 148 of the Income-tax Act 1961 cannot be sustained Issue in favour of assessee.

Summary

Issues: Challenge to notice under section 148 of the Income-tax Act, 1961 for reopening assessment for the year 2003-04.

Analysis:
1. The petitioner challenged the notice issued under section 148 of the Income-tax Act, 1961 dated March 24, 2010, seeking to reopen the assessment for the year 2003-04. The reasons recorded for reopening the assessment indicated that the income of the assessee had been understated due to the entrance fee not being routed through the income and expenditure account, resulting in an escapement of income.

2. The court noted that the assessment was sought to be reopened based on material that was already on record during the original assessment. It was highlighted that during the original assessment proceedings, the Assessing Officer had examined the allowability of the entrance fee and had allowed the claim after being satisfied. The court emphasized that there was no indication of any failure on the part of the assessee to disclose all material facts necessary for assessment.

3. As per the proviso to section 147 of the Income-tax Act, assessments beyond four years from the end of the relevant assessment year can only be reopened if there is a failure on the part of the assessee to disclose all material facts. Since there was no failure on the part of the assessee in this case, the court concluded that the notice issued under section 148 of the Income-tax Act, 1961 could not be sustained.

4. Consequently, the court made the rule absolute by quashing the notice dated March 24, 2010 issued under section 148 of the Income-tax Act, 1961. No costs were awarded in this matter.