2023 (2) TMI 315 - AT - Income Tax

Reopening of assessment u/s 147 - Reopening beyond period of four years - assessee wrongly claimed deduction towards TDS and provision for N.P.A.which were required to be disallowed - HELD THAT:- The original assessment in this case was completed u/s.143(3) and the notice u/s.148 was issued after a period of four years from the end of the relevant assessment year, namely, 2010-11. Proviso to section 147, at the material time, provides that when an assessment has been completed u/s.143(3) and the Assessing Officer seeks to reopen the assessment after a period of four years from the end of the relevant assessment year, it is incumbent upon the AO to first show that the income chargeable to tax had escaped assessment by reason of failure on the part of the assessee, inter alia, to disclose fully and truly all material facts necessary for assessment.

The items of expenses, taken note of by the AO in the notice u/s.148, may lead to prima facie escapement of income, but such items cannot come within the ambit of section 147 after a period of four years from the end of the relevant assessment year. The assessee claimed the above two deductions ex facie the Profit and loss account, which got allowed by the AO in the assessment u/s.143(3). The inference of the AO that these two items did not qualify for deduction, does not fall within the realm of failure of the assessee to disclose fully and truly all material facts necessary for reassessment - we hold that the reassessment was wrongly initiated. The same is, therefore, quashed. Assessee appeal allowed.