2004 (1) TMI 32 - HC - Income Tax

Court quashes notices reopening assessments for failure to disclose material facts

The court considered the challenge against notices issued under section 147 of the Income-tax Act to reopen assessments for the years 1982-83 and 1983-84. ... Reassessment notice – jurisdiction - while recording the reasons the figures of refundable deposits and non-refundable deposits were taken by the Assessing Officer from the returns filed by the assessee - It is thus clear that so far as these figures are concerned, they were disclosed in the returns. Apart from this, the returns were also accompanied by the balance-sheets wherein these figures were disclosed - No failure on the part of the petitioner to fully disclose the material facts is established by the Revenue - Hold that the impugned notices are without jurisdiction and, therefore, the same are liable to be quashed and set aside Issues:Challenge to notices under section 147 of the Income-tax Act for reopening assessments for the years 1982-83 and 1983-84 on grounds of jurisdiction.Analysis:The judgment addressed the challenge against notices issued under section 147 of the Income-tax Act, seeking to reopen assessments for the years 1982-83 and 1983-84. The Assessing Officer believed that income had escaped assessment due to deductions made on account of refundable and non-refundable deposits from sugarcane prices, which should have been treated as trading receipts. The Assessing Officer also noted that there was a failure to fully disclose all material facts necessary for assessment, leading to income escaping assessment.Arguments:The petitioner's counsel argued that all figures of deposits were disclosed in the return and balance-sheet, with a separate statement explaining the calculations and adjustments. It was emphasized that there was no failure to disclose material facts, as the deposits were consistently disclosed in previous assessments over 25 years. The counsel contended that the case did not fall under the proviso to section 147, enabling the Assessing Officer to invoke a longer limitation period.Counter-arguments:The Revenue's counsel argued that necessary facts regarding the deposits were not fully disclosed by the assessee, justifying the reopening of assessments within the limitation period. It was asserted that the second part of the proviso to section 147 applied to the case, warranting the notices to reopen the assessments.Consideration and Decision:The court noted that all relevant figures were disclosed in the returns and balance-sheets, along with explanations on deductions from cane bills. It was concluded that there was no failure to fully disclose material facts by the assessee. The judgment of the apex court was considered, stating that reopening should have been within four years from the assessment year's end. As the notices were issued beyond this period, they were deemed without jurisdiction. Consequently, the court quashed and set aside the notices, allowing the petition with no costs.