2017 (9) TMI 462 - AT - Income Tax

Tribunal rules in favor of assessee in assessment reopening case

DCIT Circle-9 (1), New Delhi Versus Solaris Bio Chemicals Ltd. (Now Solaris Chemtech Industries Ltd.) And Vice-Versa

DCIT Circle-9 (1), New Delhi Versus Solaris Bio Chemicals Ltd. (Now Solaris Chemtech Industries Ltd.) And Vice-Versa - TMI Issues:1. Validity of reopening assessment proceedings under section 147 beyond the four-year period.2. Failure to disclose material facts fully and truly by the assessee.3. Jurisdiction of the Assessing Officer in reopening the assessment.Analysis:Issue 1: Validity of reopening assessment proceedings under section 147 beyond the four-year period:The case involved an appeal and cross objection against an order dated 20.01.2014, regarding the quantum of assessment for the A.Y. 2004-05. The Assessing Officer issued a notice under section 147 beyond the four-year period, based on the belief that an amount had escaped assessment due to the treatment of product development expenses as capital expenditure. The Tribunal found that the Assessing Officer did not provide any new information or tangible material justifying the reassessment beyond the four-year period. The Tribunal held that the reopening of the assessment based on the provided reasons was legally unsound and quashed the assessment order.Issue 2: Failure to disclose material facts fully and truly by the assessee:The assessee contended that it had fully disclosed all material facts during the original assessment proceedings, including details of product development expenses and justification for claiming depreciation. The Tribunal observed that the assessee had submitted all relevant information and particulars, fulfilling its obligation to disclose fully and truly all material facts. The Tribunal noted that the Assessing Officer did not allege any failure on the part of the assessee to disclose material facts. Therefore, the Tribunal concluded that the assessee had discharged its disclosure obligations, and the reopening of the assessment was unjustified.Issue 3: Jurisdiction of the Assessing Officer in reopening the assessment:The Tribunal analyzed various decisions cited by both parties to determine the validity of the Assessing Officer's jurisdiction in reopening the assessment. The Tribunal distinguished the facts of the present case from the precedents cited by the Revenue, emphasizing the absence of any failure or omission on the part of the assessee to disclose material facts. The Tribunal highlighted the requirement for the Assessing Officer to establish a failure to disclose material facts in the reasons recorded for reopening the assessment, especially when done beyond the four-year period. Relying on relevant case law, the Tribunal concluded that the Assessing Officer lacked jurisdiction to reopen the assessment in this case. As a result, the revenue's appeal was dismissed, and the assessee's cross objection was allowed.In conclusion, the Tribunal held that the reopening of the assessment beyond the four-year period was unjustified as the assessee had fulfilled its disclosure obligations, and the Assessing Officer failed to provide sufficient grounds for reassessment. The judgment emphasized the importance of establishing a failure to disclose material facts in the reasons recorded for reopening assessments, especially when done beyond the statutory period.