Case Law Details
Brief of the Case
ITAT Amritsar held in the case of M/s. Apeejay Education Society & others vs. ACIT that in the present case, the reassessment is to be initiated after expiry of four years from the end of the relevant assessment year, so proviso to sec.147 need to be complied with. It remains undisputed that in the reasons recorded by the AO, there is no allegation, much less any specific one, regarding any alleged failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. Even there is not a whisper of an allegation by the AO in the reasons recorded that escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. Hence there is contravention of proviso to section 147 and accordingly reopening proceedings are bad in law.
Facts of the Case
In this case, It has been contended that in the reasons recorded for the reopening of the completed assessment of the assessee, there is no allegation regarding any failure on the part of the assessee to disclose any material facts relevant for the assessment; that in the absence of such allegation, the AO has no jurisdiction to issue any notice u/s 147 beyond four years from the end of the assessment year, where the assessment order was passed u/s 143(3).
Contention of the Assessee
The ld counsel of the assessee submitted that earlier assessment in the assessee’s case for the year under consideration, i.e., assessment year 2006-07 was completed under section 143(3) that the notice under section 148 was issued beyond a period of four years from the end of the assessment year and hence, the proviso to section 147 is applicable; that as per the proviso to section 147, where an assessment under section 143(3) has been made for the relevant assessment year, no action shall be taken u/s 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee, inter-alia, to disclose fully and truly all material facts necessary for his assessment, for that assessment year. It has been contended that in the reasons recorded for the reopening of the completed assessment of the assessee, there is no allegation regarding any failure on the part of the assessee to disclose any material facts relevant for the assessment; that in the absence of such allegation, the AO has no jurisdiction to issue any notice u/s 147 beyond four years from the end of the assessment year, where the assessment order was passed u/s 143(3). In this regard, reliance has been placed on the following case laws: i) “Dulichand Singhania vs. ACIT”, 269 ITR 192 (P&H), ii) “Mahavir Spg. Mills Ltd. vs. CIT”, 270 ITR 290 (P&H) iii) “CIT vs. Punjab Leasing Pvt. Ltd.”, ITA /596(Asr)/2014, iv) “DCIT vs. Microsoft Corporation India (P) Ltd.”, 139 TTJ 40 (Del) and v) “Haryana Acrylic Manufacturing vs. CIT”, 308 ITR 38 (Del.).
It has further been contended that the validity of notice u/s 148 has to be tested on the basis of the reasons recorded for initiating reopening of the assessment, to which reasons, nothing can be added or subtracted there from; that the reasons are to be read as they are; and that there is no scope for drawing any inference there from. Reliance has been placed on “Hindustan Liver Ltd. vs. R.B. Badkar”, 268 ITR 332 (Bom.).
Contention of the Revenue
The ld counsel of the revenue contended that this issue was never taken before either of the Taxing Authorities and as such, the assessee is precluded from doing so for the first time before the Tribunal. It has further been submitted that the reasons recorded by the AO for initiating the reassessment proceedings are detailed and the failure on the part of the assessee is clearly evincible there from.
Held by ITAT
ITAT held that wording of first proviso to section 147 is amply clear and self explanatory. As per this proviso, action u/s 147 can be taken after the expiry of four years from the end of the relevant assessment year, only in case there is failure on the part of the assessee, inter-alia, as relevant to the facts of the present case, to disclose fully and truly all material facts necessary for assessment for that assessment year. Further as per section 148(1), before making reassessment u/s 147, the AO shall serve on the assessee, a notice, as required there under. According to the main provision of section 147, reassessment can be done only if the AO has reason to believe escapement of income. Where a period of four years from the end of the relevant assessment has with the first proviso to section 147, have so escaped assessment by reason of the failure on the part of the assessee, inter-alia, to disclose fully and truly all material facts necessary for his assessment, for that assessment year.
The genesis of the reassessment proceedings, therefore, is the reasons to be recorded by the AO, of his belief of escapement of income from assessment and in compliance with the first proviso to section 147, such reasons to believe must comprise of the specific mention of the assessee’s failure to disclose fully and truly all material facts necessary for assessment for the relevant assessment year where, as in the present case, the reassessment is to be initiated after expiry of four years from the end of the relevant assessment year. It remains undisputed that in the reasons recorded by the AO, there is no allegation, much less any specific one, regarding any alleged failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In the present case, there is not even a whisper of an allegation by the AO in the reasons recorded that escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment.
In “Dulichand Singhania” 269 ITR 192 (P&H) , it has been clearly held by the Hon’ble Jurisdictional High Court that in order to assume jurisdiction u/s 147 in a case where the assessment has been made u/s 143(3), the AO must have reason to believe that income chargeable to tax has escaped assessment and that such escapement occurred by reason of failure on the part of the assessee, inter-alia, to disclose fully and truly all material facts necessary for his assessment for that purpose, where action u/s 147 is sought to be taken after the expiry of four years from the end of the relevant assessment year, the assessment having been made u/s 143(3).
All the other case laws relied on by the assessee are to the same effect. The Department has not been able to cite any decision contrary to these decisions. Therefore, the grievance of the assessee in this regard is justified. It is accepted as such. Accordingly, the notice issued u/s 148 and all proceedings pursuant thereto are quashed, as a result nothing further survives for adjudication.
Accordingly all appeals allowed.
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