Case Law Details
Bharti Cellular Ltd. Vs DCIT (ITAT Delhi)
It is trite that in order to reopen an assessment made under Section 143 (3) of the Act after the expiry of four years from the end of the relevant assessment year, the reasons recorded must allege that there was failure on the part of the assessee to disclose fully and truly material facts necessary for its assessment. Such allegation is necessary since it is a condition precedent to the assumption of jurisdiction. In the absence of such allegation, the reassessment proceedings have to be held as without jurisdiction.
We note that at the time when the assessee’s assessment was completed, the law as it stood was that there was no liability to deduct tax at source in respect to discount and roaming charges. Therefore, in our considered opinion, there cannot even be an allegation of failure to disclose fully and truly any material fact necessary for assessment. Reliance by the Revenue on the judgment of the Hon’ble Supreme Court in the case of A.L.A. Firm vs. CIT as reported in [1999] 189 ITR 285 (SC) is misplaced in as much as this judgment of the Hon’ble Apex Court relates to reopening of assessment within a period of four years on the basis of information, being a judgment which came to the notice of the Assessing Officer subsequent to the assessment. In our considered opinion, this principle will not apply where the assessment is sought to be reopened after the expiry of four years from the end of the relevant assessment year on the basis of a subsequent judgment of the Hon’ble Delhi High Court which is being interpreted as reversing the legal position and in such case the Assessing Officer will have to establish failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
The Hon’ble Calcutta High Court in the case of Calcutta Club Ltd. vs. Income Tax Officer, in W.P. No.719 of 2014, vide order dated 14.02.2020, after duly considering the judgment of the Hon’ble Apex Court in A.L.A. Firm vs. CIT (supra), ITO vs. Saradbhai M. Lakhani [2002], 242 ITR 01 (SC) and Maharaj Kumar Kamal Singh vs. CIT [1959] 35 ITR 01 (SC) concluded that when there was not even a whisper in the reasons that there was any omission or failure on the part of the assessee in disclosing fully and truly material facts for assessment, subsequent decision of the Hon’ble Apex Court reversing the legal position prevailing at the time of assessment cannot be called an omission or failure on the part of the assessee in disclosing fully and truly the material facts necessary for relevant assessment. The Hon’ble Calcutta High Court went on to quash the notice issued u/s 148 of the Act and the proceedings u/s 147 of the Act.
Therefore, in view of the above mentioned judicial precedents, we find that in the circumstances, the impugned notice is not sustainable and is liable to be quashed. Therefore, we hold that the impugned notice u/s 148 of the Income Tax Act and the proceedings u/s 147 of the Act are not sustainable in law for the reason that there is no whisper in the recorded reason that there was any omission or failure on the part of the assessee in disclosing fully and truly facts for assessment. We quash the reassessment proceedings accordingly.
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