Reopening of assessment not permitted if no Failure of Assessee to disclose material facts

Biddle Sawyer Limited Vs. ACIT (ITAT Mumbai)

The point to be examined is as to whether all material facts were available to the Assessing Officer on the impugned issue or else, was there a failure on the part of the assessee to disclose. The stand of the Revenue is that there was a failure to make full and true disclosure of material facts as required by the proviso to Sec. 147 of the Act. No doubt, the proviso to Sec. 147 of the Act uses the words “material facts” and thus, it means that furnishing of ‘just the facts’ would not suffice, but rather the requirement is to furnish “material facts”. It can be safely understood that what is required in the present context is the relevant or concerned facts. In terms of the material referred to by the learned representative, and which was available to the Assessing Officer during the original assessment proceedings, it is quite clear that assessee disclosed the details of selling and distribution expenses and also the various elements of expenses debited therein, including that of advertisement giveaways and interview plans. Therefore, the Assessing Officer was quite aware of the expenditure and if that was known to him, what further facts were required to be disclosed so as to be construed as “material facts” ? The reasons recorded do not allude to such further “material facts”, which the Assessing Officer expected the assessee to disclose, and which were necessary for his assessment but not disclosed. Therefore, factually speaking, we find enough weight in the plea canvassed that there has been no failure on the part of the assessee to disclose the material facts as required by the proviso to Sec. 147 of the Act and thus, in our view, the initiation of proceedings by issuance of notice u/s 147/148 of the Act was vitiated.

Full Text of the ITAT Order is as follows:-

The captioned appeal by the assessee is directed against the order of CIT(A)-12, Mumbai dated 09.09.2015 pertaining to the Assessment Year 2006-07, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 30.10.2013 u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (in short ‘the Act’).

2. In its appeal, assessee has raised the following Grounds of appeal:-

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