Colen Chemical Pvt. Ltd. Vs ITO (ITAT Ranchi)
Beyond Four Years, Silence Is Fatal: ITAT Ranchi Quashes Reopening for Want of ‘Failure to Disclose’
The ITAT Ranchi allowed the assessee’s appeals for AYs 2013–14 and 2014–15, quashing the reassessment proceedings initiated under sections 147/148 after the expiry of four years from the end of the relevant assessment years. In both years, the original assessments had been completed under section 143(3).
The Tribunal noted that where reopening is sought beyond four years, the proviso to section 147 mandates a clear and specific allegation that income escaped assessment due to the assessee’s failure to disclose fully and truly all material facts. On a careful examination of the recorded reasons, the Bench found that there was no such allegation or even a whisper of failure on the part of the assessee to make full and true disclosure.
Although the reasons relied heavily on an investigation report alleging accommodation entries and paper/shell companies, the Tribunal held that this aspect was irrelevant once the statutory precondition under the proviso to section 147 was not satisfied. The issue was not whether there was borrowed satisfaction or change of opinion, but the complete absence of the mandatory jurisdictional fact in the recorded reasons.
Relying squarely on the Supreme Court decision in CEAT Ltd. (449 ITR 171), the Tribunal held that in the absence of an allegation of failure to disclose material facts, reopening beyond four years is void ab initio. Consequently, the reasons recorded, notices under section 148, and the consequential reassessment orders for both assessment years were quashed in entirety, and the appeals of the assessee were allowed.
