TMI Blog2023 (2) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... iry of period of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such year by reason of the failure on the part of the assessee as to make a return under section 139, or in response to the notice u/s 142(1) or section 148 as to disclose fully and truly all material facts necessary for its assessment for that assessment year. Since this is a case of reopening beyond the period of four years, AO was to satisfy the jurisdictional conditions on both counts, i.e., reason to believe and failure to disclose fully and truly the material facts . It is a settled principle of law that the jurisdiction exercised u/s 147 by an AO has to be tested on the touchstone of the reasons recorded, which can neither be improved subsequently nor added in the reply or in the subsequent pleadings. Admittedly, this was a case where an order of assessment under section 143(3) had been passed for the relevant assessment year. As per the ratio of the judgment in Hindustan Lever Ltd. V/s. R. B. Wadkar, Assistant Commissioner of Income-Tax and Ors. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] AO was obliged to disclose as to which fact or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as under : 2.1 The petitioner fled a return of income for the assessment year 2015-16. The case was subsequently selected by Computer Assisted Scrutiny Selection (CASS) for scrutiny assessment. Notices were issued under section 143(2) of the Act on 17th March 2016 and subsequently under section 142(1), dated 23rd January 2017. Necessary information and details were fled pursuant to such notices including the petitioner s claim for deduction under section 35(2AB) of the Act. Finally, an order of assessment dated 13th June 2017 was passed under section 143(3) of the Act assessing the total income at Rs.8,48,00,190/-, by disallowing Rs.32,70,724/- being excess deduction claimed under section 35(2AB) of the Act. The disallowance was subsequently reduced to Rs.16,35,262/- as per rectification order dated 23rd June 2017 passed under section 154 of the Act. 2.2 Notice dated 30th March 2021 was issued under section 148 seeking to reopen assessment for the assessment year 2015-16 on the ground that income chargeable to tax had escaped assessment. Pursuant to the said Notice and in compliance thereof, return of income was fled and reasons were sought, for such reopening, which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed material facts necessary for his assessment of the year under consideration thereby necessitating reopening under section 147 of the Act. 3. Objections were filed by the assessee to the proposed reopening, which were rejected vide order dated 21st February 2022, which too, is impugned in the present petition. 4. Counsel for the petitioner urged that the impugned notice and the order dated 21st February 2022 are unsustainable as the petitioner had made full disclosure of all material facts which were gone into by the Assessing Officer leading to the passing of the order under section 143 of the Act. It was urged that there was no failure on the part of the assessee to disclose fully and truly material facts necessary for the purpose of assessment which was a jurisdictional pre-condition which onus has not been discharged by the Assessing Officer under section 147 of the Act illegal and bad in law. 5. Counsel for the revenue, on the other hand, generally supported and buttressed the view expressed by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts were not disclosed fully and truly. Shelter is sought to be taken by the AO in the reasons recorded that although the assessee had produced books of account, annual reports and audited profit and loss account as also the balance-sheet etc., the relevant material or facts were so embedded therein that they could not have been discovered by the AO despite due diligence. 10. In our opinion, the AO has failed to establish that there was any failure on the part of the assessee to disclose fully and truly any material fact in the present case. As all the relevant facts had not only been disclosed, as stated in the preceding paragraphs, but had also been considered by the AO, while considering the claim of deduction under section 35(2AB) in the order of assessment. Apart from this, the impugned notice has been issued without there being any tangible material with the AO as he clearly relied upon the material which was already on record. No information was received by the AO between the date of the order of assessment under section 143(3) and the issuance of the notice under section 148 of the Act. This is clearly impermissible in terms of the ratio of the judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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