Case Law Details
Prime Developers Vs ACIT (ITAT Mumbai)
Reopening of assessment beyond four-year limitation period invalid if AO fails to establish failure on the part of Assessee to fully and truly disclose all material facts necessary for assessment.
Prime Developers had undergone a regular scrutiny assessment under section 143(3) for the assessment year 2011-12, concluded on March 21, 2014. Subsequently, a notice under section 148 was issued on March 27, 2018, beyond the four-year limitation period specified in the first proviso to Section 147. The issue in question was whether there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment.
The Income Tax Appellate Tribunal (ITAT), Mumbai, considered that the Assessing Officer (AO) primarily relied on information from the balance sheet and profit and loss account, which had already been scrutinized during the original assessment. The ITAT noted that the details of sundry creditors, loss on cancellation of sales, and sales records had all been disclosed by the assessee during the original assessment proceedings. The ITAT emphasized that mere passage of time (more than six years in some cases) does not constitute cessation of liability for tax purposes unless specifically recognized as such by the assessee.
The Tribunal concluded that the reasons recorded by the AO did not establish a failure on the part of Prime Developers to disclose material facts as required by law. Therefore, the reopening of assessment beyond the four-year limitation period was deemed invalid. As a result, the reassessment proceedings initiated by the AO were quashed, and the appeal of Prime Developers was allowed while dismissing the appeal of the Revenue.
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