2022 (1) TMI 1392 - HC - Income Tax

Court quashes late tax notice, stresses full disclosure for assessment.

The court quashed the notice issued under Section 148 of the Income Tax Act, 1961 for A.Y. 2012-13, as it was beyond the prescribed time limit and lacked ... Reopening of assessment u/s 147 - notice issued after more than four years of the expiry of the relevant assessment year - onus is on respondent to show that there was failure on the part of petitioner to fully and truly disclose all material facts that was required for assessment - HELD THAT:- When the primary facts necessary for assessment are fully and truly disclosed, AO is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the AO, it would not be open to reopen the assessment based on the very same material with a view to take another view. We also find from the records filed with the petition that a specific query had been raised by the AO and he had sought from petitioner pending details of reconciliation of ITS Information and petitioner had also replied to the same. It is settled law that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not even necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. [Aroni Commercials Ltd. [2014 (2) TMI 659 - BOMBAY HIGH COURT]]. Notice set aside - Decided in favour of assessee. Issues:1. Validity of notice under Section 148 of the Income Tax Act, 1961 for A.Y. 2012-13.2. Failure to disclose all material facts required for assessment.3. Re-opening of assessment based on details available on record.4. Jurisdictional Assessing Officer's decision on TDS credit.5. Application of legal principles regarding re-opening of assessment.6. Consideration of queries raised during assessment proceedings.Analysis:1. The petitioner challenged a notice issued under Section 148 of the Income Tax Act, 1961 for A.Y. 2012-13, beyond the four-year limit, invoking the proviso to Section 147. The respondent had to demonstrate a failure on the petitioner's part to fully disclose material facts.2. The respondent admitted that the notice was based on available record details, indicating no failure to disclose. The re-opening was solely on existing records, suggesting no new undisclosed facts.3. The Jurisdictional Assessing Officer contended that excess TDS credit was allowed, leading to a re-opening. However, legal precedent emphasizes that re-opening based on the same material without new facts is impermissible.4. The Assessing Officer had raised queries during assessment, and the petitioner had responded, indicating consideration of these queries during assessment. The law establishes that a change of opinion post-assessment does not justify reassessment.5. The court allowed the petition, quashing the notice and subsequent order, emphasizing the lack of justification for reassessment based on the same disclosed facts. The judgment highlighted the importance of fully disclosing primary facts for assessment.6. The judgment concluded by disposing of the petition without costs, affirming that once queries are addressed during assessment, reassessment based on the same material without new facts is unwarranted.