2008 (12) TMI 827 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing cross-objections by the assessee.
2. Validity of the notice issued under Section 148 of the Income Tax Act.
3. Jurisdiction of the Assessing Officer to reopen the assessment under Section 147.
4. Deletion of the addition of Rs. 20,93,725 to the income of the assessee.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Cross-Objections by the Assessee:
The assessee filed cross-objections after a delay of 1,094 days and sought condonation of this delay. The assessee argued that the delay was due to the shifting of its head office and the lack of proper legal advice. The Departmental Representative opposed this, stating that the assessee had the necessary legal aid and records, as evidenced by the filing of other appeals during the same period. The Tribunal found no reasonable cause for the delay and noted that the objections were superfluous and amounted to filibustering, causing delay in the dispensation of justice. Thus, the application for condonation of delay was rejected.

2. Validity of the Notice Issued under Section 148:
The assessee challenged the validity of the notice issued under Section 148, arguing that it was issued beyond the four-year limitation period and without any failure on its part to disclose material facts. The Tribunal examined the reasons recorded by the Assessing Officer, which did not allege any failure by the assessee to disclose fully and truly all material facts necessary for the assessment. Citing the jurisdictional High Court's decisions, the Tribunal concluded that the notice issued under Section 148 was a nullity in the eyes of law as it lacked the necessary averment of the assessee's failure to disclose material facts.

3. Jurisdiction of the Assessing Officer to Reopen the Assessment under Section 147:
The Tribunal considered whether the Assessing Officer had the jurisdiction to reopen the assessment under Section 147. It was noted that the original assessment order was passed on 24-3-1994, and the notice under Section 148 was issued on 29-3-2001, well beyond the four-year period. The Tribunal reiterated that for reopening an assessment beyond four years, it was essential to allege a failure on the part of the assessee to disclose fully and truly all material facts. Since no such failure was alleged in the recorded reasons, the reopening of the assessment was held to be without jurisdiction.

4. Deletion of the Addition of Rs. 20,93,725 to the Income of the Assessee:
The revenue's appeal challenged the deletion of the addition of Rs. 20,93,725, which was written back to the Profit and Loss Account from the "provision for loan loss reserve." The Tribunal found that the assessee had disclosed the provision made and written back transparently in the statement of income annexed to the return. The figures were also reproduced in the original assessment order. Thus, there was no failure on the part of the assessee to disclose material facts. Consequently, the Tribunal held that the assessing officer did not have jurisdiction to issue the notice under Section 147, and the reassessment made thereon was bad in law.

Conclusion:
The Tribunal dismissed all the appeals of the revenue and the cross-objections of the assessee. The key findings were that the application for condonation of delay in filing cross-objections was rejected, the notice issued under Section 148 was invalid, the Assessing Officer lacked jurisdiction to reopen the assessment under Section 147, and the deletion of the addition of Rs. 20,93,725 was upheld.