2016 (6) TMI 201 - AT - Income Tax

Reopening of assessment beyond time limit deemed invalid; assessee's appeal allowed

M/s. Idea Cellular Ltd. Versus Dy. Commissioner of Income Tax - 3 (2), Mumbai

The Tribunal held that the reopening of assessment in this case was not valid as it was done beyond the four-year limit without any failure on the part of ... Reopening of assessment - reasons to believe - Held that:- From the reasons recorded by the AO it reveals that there is no whisper about what material facts the assessee had failed to disclose fully and truly. The reopening has been done on the basis of facts and material which were already on record. There is no allegation that there was any failure on the part of the assessee to disclose fully and truly any material fact, necessary for the completion of assessment. Even, there is no such mention of any failure on the part of assessee to disclose any material fact in the notice dated 30.03.10 served on the assessee under section 148 of the Act. The AO in the reasons recorded has mentioned about the fact and circumstances already available on the record. The reopening in this case, thus, is hit by the 1st Proviso to section 147 of the Act as discussed above. Thus the very reopening in this case is bad in law and the same is set aside - Decided in favour of assessee Issues:Reopening of assessment under section 147 of the Act after four years from the relevant assessment year, Failure to disclose fully and truly all material facts during original assessment proceedings.Analysis:Reopening of Assessment under Section 147:The appeal was against the order of the Commissioner of Income Tax (Appeals) relevant to assessment year 2003-04. The assessee contested the additions made due to the reopening of assessment under section 147 of the Act. The assessee argued that the reopening was beyond the permissible four-year period and was done without any failure on their part to disclose all necessary facts during the original assessment. The AO initiated proceedings under section 147 after the original assessment under section 143(3) and served notice under section 148 after four years from the relevant assessment year. The 1st proviso to section 147 states that assessment cannot be reopened after four years unless there was a failure to disclose fully and truly all material facts. The AO's reasons for reopening did not mention any failure on the part of the assessee to disclose necessary facts, rendering the reopening invalid.Failure to Disclose Material Facts:The AO's reasons for reopening did not specify any material facts that the assessee had failed to disclose fully and truly. The reopening was based on existing facts and materials already on record, without any indication of non-disclosure by the assessee. The notice under section 148 also did not mention any failure to disclose material facts. As per the 1st proviso to section 147, the assessment cannot be reopened after four years unless there was a failure to disclose all necessary facts. Since there was no evidence of such failure, the reopening was deemed invalid in this case.Conclusion:The Tribunal held that the reopening of assessment in this case was not valid as it was done beyond the four-year limit without any failure on the part of the assessee to disclose material facts. Therefore, the consequential additions were unsustainable in the eyes of the law and were ordered to be deleted. Consequently, the appeal of the assessee was allowed, and the reopening of assessment was set aside.This detailed analysis highlights the key legal aspects of the judgment, focusing on the issues of reopening assessment under section 147 and the requirement to disclose all material facts during the original assessment proceedings.