Case Law Details
The reasons supplied to the assessee for reopening of the case relates mainly to Share capital, which is already been investigated by Assessing officer in detail during Original Assessment. Therefore, The present exercise of issuing the notice under Section 148 of the Act would amount to nothing but a change of opinion, which is not permissible.
The main challenge raised in the writ petition is that the reassessment proceedings have been initiated after a period of 4 (four) years from the end of the relevant assessment year and the precondition for such initiation that there was failure on the part of the assessee to fully and truly disclose all the material particulars necessary for the assessment is absent. It is contended that there was true and full disclosure of all material particulars made by the assessee and the reasons for re-opening do not even show that there was any such failure on the part of the assessee. It is further contended that it is a clear case of change of opinion, in as much as, the issue sought to be raked up by way of the impugned notice under Section 148 of the Act had been duly considered by the Assessing Officer during the original assessment under Section 143(3) of the Act.
A detailed questionnaire was issued by the Assessing Officer during the original proceedings under Section 143(3) of the Act raising specific queries with regard to share application money.
In response to the said query raised in the questionnaire, the assessee vide its response dated 07.08.2009 furnished the details of the share capital raised during the year. Alongwith with the response complete details of the shareholders, their addresses, PAN numbers and number of shares were furnished. In addition thereto, a confirmation letter from each of the shareholders was filed, providing the details of the shares, investment made, mode of payment and the bank through which the payment was made. In addition thereto, the acknowledgement of e-returns of each of the shareholders was also furnished.
After the above-mentioned information was received by the Assessing Officer, the assessment was framed under Section 143(3) of the Act on 07.10.2009 accepting the taxable income declared by the assessee and no addition was made on account of the share application money.
In CIT vs. Usha International Ltd. (2012) 348 ITR 485 (Delhi) (FB), a full bench of this Court held:-
“Re-assessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The re-assessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons.”
On 27.03.2014, the impugned notice under Section 148 of the Act has been issued. The reasons supplied to the assessee for reopening of the case dated 24.03.2014 relates mainly to Share capital, which is already been investigated by Assessing officer in detail during Original Assessment.
Therefore, in our view, the present exercise of issuing the notice under Section 148 of the Act would amount to nothing but a change of opinion, which is not permissible.
Another reason why the impugned notice under Section 148 and the proceedings consequent thereto have to be set aside is that the pre-condition of there being a failure on part of the assessee to fully and truly disclose all the material particulars necessary for assessment has not been made out.
Perusal of the reasons for initiating re-assessment shows that there is not even an allegation that there has been failure on the part of the petitioner/assessee to fully and truly disclose all the material particulars necessary for re-assessment.
In Haryana Acrylic Manufacturing P. Ltd. Co. Vs. CIT 2009 (308) ITR 38 (Delhi), this Delhi High Court held as under:-
“29. In the reasons supplied to the petitioner, there is no whisper, what to speak of any_ allegation,that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade Private Ltd. [2009] 308 ITR 22 (Delhi) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania [2004] 269 ITR 192 that, in the absence of an allegation in the reasons recorded that the 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 his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated March 29, 2004, under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated March 2, 2005, are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above.”
In the present case also, there is not even a whisper of any allegation that there has been a failure on the part of the assessee to disclose fully and truly all material particulars necessary for assessment.
Thus the petition is liable to succeed. The writ petition is allowed and the impugned notice under Section 148 of the Act dated 27.03 .2014 and all proceedings consequent thereto including the order dated 23.02.20 15 are quashed /set aside.
