2008 (7) TMI 1010 - HC - Income Tax

Invalid reopening of assessment under section 147 of IT Act

The case involved the validity of reopening assessment under section 147 of the IT Act. The Revenue contended that the assessee failed to disclose all ... - Issues involved:The issues involved in this case are:1. Validity of reopening assessment u/s 147 when all relevant material was not furnished by the assessee.2. Whether non-disclosure of material facts regarding norms of National Housing Bank constitutes full and true disclosure.Issue 1: Validity of reopening assessment u/s 147:The appeal was filed by the Revenue against the Tribunal's order in ITA No. 581/Mad/2005 for the assessment year 1996-97. The assessee, engaged in housing finance, had initially filed a return of income admitting total income of Rs. 1,96,31,710. The assessment was completed under section 143(3) of the IT Act, but was later reopened under section 147, resulting in a reassessment determining the total income at Rs. 4,80,64,413. The Revenue contended that the assessee failed to admit the correct income, leading to the income escaping assessment. However, the CIT(A) and Tribunal held that the reopening was invalid as all relevant information had been disclosed by the assessee at the time of filing the return.Issue 2: Non-disclosure of material facts regarding National Housing Bank norms:The Revenue argued that the assessee did not furnish all information to the Assessing Officer (AO), leading to the reopening of assessment under section 147. However, it was established that the appellant had provided an elaborate note on interest income on Non-Performing Assets (NPAs) and a copy of the board resolution regarding bad debts in the account of M/s Fiesta Properties. The CIT(A) and Tribunal found that the assessee had fully and truly disclosed all material facts necessary for assessment, as per the provisions of the law. The reopening of assessment under section 147 was deemed invalid, and the subsequent proceedings were held to be vitiated.In conclusion, both the CIT(A) and Tribunal concurred that there was no failure on the part of the assessee to disclose relevant facts fully and truly, and the reassessment was based on a mere change of opinion. The decision was in line with the legal principles established in previous judgments. Consequently, the Tribunal's order was upheld, and the tax case appeal was dismissed as no substantial question of law arose from the proceedings.