Reopening of assessment after full and true disclosure of material facts unsustainable

Astec LifeSciences Ltd. Vs ACIT (Bombay High Court)

Bombay High Court held that reopening of assessment u/s 147 of the Income Tax Act unsustainable as the assessee has fully and truly disclosed all the material facts.

Facts- Petitioner is engaged in the business of manufacturing and trading of agrochemicals and pharmaceutical intermediates. With effect from 6^th November 2015 petitioner was acquired by Godrej Group. The matter pertains to Assessment Year 2013-2014.

Petitioner is challenging the notice dated 23^rd March 2021 issued by respondent no.1 u/s. 148 of the Income Tax Act, 1961 for reopening the assessment for Assessment Year 2013-2014 and the order dated 18^th January 2022 disposing petitioner’s objections.

Conclusion- Held that where the assessee has fully disclosed all the material facts, it is not open for the Assessing Officer to reopen the assessment on the ground that there is a mistake in assessment. What is recorded is that petitioner has wrongly claimed certain deductions which he was not entitled to. There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts fully and truly. It is only in the latter case that the Assessing Officer would be entitled to proceed under Section 147 of the Act.

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