2012 (3) TMI 703 - AT - Income Tax

Invalid reassessment overturned by Tribunal for lack of proof of assessee's negligence, emphasizing full disclosure requirement.

The Tribunal allowed the appeal against the Commissioner of Income-tax (Appeals)-I, Trivandrum for the assessment year 2002-03. The reassessment ... - Issues involved: Reopening of assessment u/s 147 after four years based on judgment of the Apex Court, disclosure of material facts by the assessee, validity of reassessment proceedings.Summary:The appeal was filed against the order of the Commissioner of Income-tax (Appeals)-I, Trivandrum for the assessment year 2002-03. The assessee had initially filed the return of income on 27-08-2002, and the assessment was completed u/s 143(3) r.w.s. 147 after reopening the assessment u/s 147 on 14-09-2007. The assessing officer reopened the assessment for the second time based on the judgment of the Apex Court in a specific case. The main contention was whether there was negligence on the part of the assessee in disclosing all the necessary material for assessment.The ld.representative for the assessee argued that since all the particulars for completing the assessment were disclosed, the assessment should not have been reopened after the expiry of four years. The assessing officer's reasons for reopening the assessment did not mention any negligence on the part of the assessee in disclosing material facts. The ld.DR, on the other hand, contended that mere production of books of account may not amount to full disclosure as per Explanation 1 to section 147.Upon considering the submissions and perusing the record, it was noted that the assessing officer reopened the assessment after the expiry of four years without establishing any negligence on the part of the assessee in disclosing material facts. The Tribunal referred to a similar case where it was found that the department cannot reopen the assessment after four years without proving negligence on the part of the assessee. Therefore, the reassessment proceedings were deemed invalid, and the orders of the lower authorities were set aside, resulting in the appeal of the assessee being allowed.In conclusion, the Tribunal held that reopening the assessment after the expiry of four years without proving negligence on the part of the assessee in disclosing material facts necessary for assessment was not valid, leading to the allowance of the appeal.