Tribunal quashes notice and assessment order due to lack of disclosure, appeal allowed.

The tribunal quashed the notice issued under Section 148 and the assessment order, as there was no failure on the part of the assessee to disclose all material facts, and such failure was not mentioned in the recorded reasons. The appeal was allowed, and other grounds raised did not require further consideration due to the quashing of the assessment order.

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Issues Involved:
1. Validity of reopening of assessment under Section 147 of the Income-tax Act, 1961.
2. Whether there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.

Detailed Analysis:

1. Validity of Reopening of Assessment under Section 147:
The assessee appealed against the reopening of the assessment for the year 2001-02, which was originally completed under Section 143(3). The reopening was challenged on the grounds that it was initiated beyond the period of four years without any failure on the part of the assessee to disclose all material facts. The counsel for the assessee argued that the reopening was based on the non-application of a specific provision of law (Section 80IA(9)) and not due to any failure to disclose material facts. The counsel cited judgments from the Hon'ble Jurisdictional High Court in support of their contention.

The Departmental Representative (DR) countered by stating that the assessee had failed to disclose material facts, specifically the ineligibility for further deduction under Section 80HHC on the same profit for which deduction had already been claimed under Section 80IB. The DR cited several Supreme Court judgments to argue that the obligation to disclose material facts fully and truly lies with the assessee.

2. Failure to Disclose Fully and Truly All Material Facts:
The tribunal examined the reasons recorded for reopening the assessment. The reasons indicated that the assessment was reopened due to the non-reduction of the deduction allowed under Section 80IB while calculating the deduction under Section 80HHC. However, the tribunal noted that the Assessing Officer (AO) did not mention any failure on the part of the assessee to disclose fully and truly all material facts in the recorded reasons.

The tribunal referred to the judgments of the Hon'ble Jurisdictional High Court in the cases of Haryana Acrylic Manufacturing Co. and Sonitpur Solvex Ltd. In both cases, it was held that the absence of any mention of failure to disclose material facts in the recorded reasons invalidated the reopening of the assessment beyond the four-year period.

The tribunal concluded that the reopening of the assessment was not justified as there was no failure on the part of the assessee to disclose fully and truly all material facts, and there was no mention of such failure in the recorded reasons. Consequently, the notice issued under Section 148 and the subsequent assessment order were quashed.

Conclusion:
The tribunal quashed the notice issued under Section 148 and the assessment order passed in pursuance of such notice. The appeal of the assessee was allowed, and the other grounds raised by the assessee did not require adjudication on merits due to the quashing of the assessment order.

Decision:
The appeal of the assessee was allowed, and the decision was pronounced in the open Court on 04.01.2017.

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