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2020 (1) TMI 1318 - HC - Income TaxValidity of reopening the assessment based on audit objections - notice after four years after acceptance of assessment for the financial year 2012-13 - Full and True Disclosure - Income u/s 56(2)(viia) was not routed through P&L Account and the said income was not considered either in the returned income or in the assessed income for the purpose of computing book-profits or for arriving at income under normal provisions of the Act - HELD THAT:- As stated earlier, objection was raised by the audit party for which a reply was given by the assessing authority to the audit authorities to drop the proceedings with regard to Half Margin Audit. Therefore, the contingency for reopening/ reassessing in case of an audit objection came to be rejected by the Assessing Officer himself by giving an appropriate reply in the month of October itself. In-fact, in paragraph 16 of the counter it is stated that, “in the interests of revenue, the Assessing Officer is left with no option except to initiate a suitable remedial action on the findings of the Audit Team” which in our view cannot be a ground for reopening the assessment. Reassessment proceedings after expiry of four years - A notice under Section 148 was issued in the month of March 2019 pertaining to the assessment year 2012-13, therefore, it is clearly beyond the period of four years and against the proviso to Section 147 of the Act. Full and True Disclosure - In the instant case the Notice refers to a failure on the part of the Petitioner to disclose fully and truly all material facts, but, the same does not indicate the exact nature of non-disclosure on the part of the Petitioner. Such a notice is erroneous in law. The contents of the notice if tested with the contents of the counter would show that all the particulars were in-fact disclosed at the time of assessment proceedings and the same was also accepted, which is evident not only from the order of assessment, but, also from the reply given to the audit party. Therefore, it cannot be said that, there was any failure on the part of the Petitioner in disclosing fully and truly all material facts Reassessment based on mere change of opinion being invalid - If the Income Tax Officer draws an inference, which was subsequently found to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening the assessment - mere change in opinion cannot lead to reassessment. Reassessment based on audit objections invalid - As decided in CORPORATION BANK LIMITED [1999 (2) TMI 16 - SUPREME COURT] When there is no failure on the part of the assessee in disclosing fully and truly the material facts necessary for the assessment years for the respective years, Section 147(a) has no manner of application. Even when the required facts were disclosed in the balance sheet, the same does not amount to incorrect disclosure before the Assessing Officer. As referred by us earlier, in the instant case, these facts were disclosed in cash flow statement, balance-sheet, notes to the financial statements for the year ending 31.03.2012 and the profit and loss accounts/balance sheet. Therefore, it cannot be said that, there was no disclosure of income and that the provisions of Section 147(b) get attracted. Since there is alternative remedy, the Petitioner ought not have invoked the jurisdiction of this Court - In Jeans Knit (P.) Ltd [2016 (12) TMI 878 - SUPREME COURT] dealt with the said issue where the High Court dismissed the Writ Petitions preferred by assessee challenging issuance of notice under Section 148 as the same is contrary to law laid down in Calcutta Discount Co. Ltd. v. Income-tax Officer [1960 (11) TMI 8 - SUPREME COURT] While setting aside Orders of the High Court, the matters were remitted to the respective High Courts to decide the Writ Petitions on merits - since the proceeding initiated by the authorities is found to be illegal and incorrect on various aspects as discussed supra, there is no justification to direct the Writ Petitioner to avail the alternative remedy of appeal. - Decided in favour of assessee.
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