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2013 (10) TMI 101 - HC - Income TaxReassessment u/s 147 - issuance of notice u/s 148 beyond four years - issue regarding adjustments u/s 115JB regarding unabsorbed depreciation or unabsorbed business loss, whichever is lower Held that - Assuming that there is a different angle that needed to be examined by the Assessing Officer from the material which was already existing on the record, as held in case of Jivraj Tea & Industries Ltd. (2013 (7) TMI 544 - GUJARAT HIGH COURT), here also we find that specific angle of depreciation earlier claimed; if was not in the mind of the Assessing Officer, nevertheless, when entire details were already made available at the time of original assessment, this ground cannot be validated. In the scrutiny assessment when the very issue has been examined thoroughly, the notice for reopening lacks validity and therefore on jurisdictional issue, this petition deserves to be allowed. Decided in favor of Assessee.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment. 2. Whether the conditions for reopening the assessment beyond four years were met. 3. Examination of the reasons provided for reopening the assessment. 4. The applicability of the principle of "change of opinion." 5. The role of full and true disclosure by the assessee. 6. The scope of judicial review under Article 226 of the Constitution of India. Detailed Analysis: 1. Validity of the Notice Issued Under Section 148: The petitioner challenged the notice dated 10th February 2012 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for A.Y 2005-06. The petitioner argued that the notice was issued beyond the period of four years from the end of the relevant assessment year and lacked any indication of failure on the part of the assessee to disclose all necessary facts. 2. Conditions for Reopening Assessment Beyond Four Years: The court examined whether the conditions for reopening the assessment beyond four years were met. The proviso to Section 147 of the Act stipulates that no action shall be taken after four years unless the income chargeable to tax has escaped assessment due to the failure of the assessee to disclose fully and truly all material facts necessary for the assessment. 3. Examination of the Reasons Provided: The reasons recorded for reopening the assessment included: - The book profit shown by the assessee was Rs. 67,58,22,149, but the taxable profit was shown as NIL due to brought forward business loss and dividend income. - The unabsorbed depreciation was NIL, and as per Section 115JB, the lower of the unabsorbed depreciation or business loss should be reduced from the book profit. - The book profit was under-assessed by Rs. 167,41,98,284. The court found that the reasons did not indicate any failure on the part of the assessee to disclose fully and truly all material facts. The details mentioned in the reasons were already available during the original assessment. 4. Applicability of the Principle of "Change of Opinion": The petitioner argued that reopening the assessment on the same grounds as the original assessment amounted to a change of opinion. The court agreed, stating that the Assessing Officer was merely examining the issue from a different angle based on the same material already on record, which is impermissible. 5. Role of Full and True Disclosure by the Assessee: The court emphasized that the duty of the assessee is to disclose all primary facts truly and fully. The court found that the petitioner had disclosed all necessary details during the original assessment, and there was no failure on the part of the assessee to disclose material facts. 6. Scope of Judicial Review Under Article 226: The court reiterated that it has the discretion to entertain a writ petition under Article 226 when the revenue authority acts without jurisdiction, causing unnecessary harassment to the assessee. The court found that the conditions for assuming jurisdiction for reopening the assessment were not met, and thus, the notice under Section 148 and subsequent proceedings were quashed. Conclusion: The court allowed the writ petition, holding that the notice for reopening the assessment lacked validity due to the absence of failure on the part of the assessee to disclose fully and truly all material facts. The reopening of the assessment was deemed impermissible as it amounted to a change of opinion based on the same material already on record. The court quashed the impugned notice and subsequent proceedings.
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