Tax Reassessment Notice Quashed: No Omission in Disclosure Found, Issued Beyond Four-Year Limit.

The HC quashed the notice for reopening the assessment issued beyond the four-year period from the assessment year 2011-12, as the Assessing Officer failed to demonstrate any omission by the assessee to fully disclose material facts. The court determined that all grounds for reassessment were based on existing records, not new information. The petition was allowed, and the notice was deemed unjustified.

---

---

Issues Involved:
1. Validity of reopening the assessment beyond the four-year period.
2. Alleged failure by the assessee to disclose fully and truly all material facts.
3. Specific grounds for reassessment cited by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Validity of reopening the assessment beyond the four-year period:
The petitioner challenged the notice of reopening of assessment dated 24th September 2018, which was issued beyond the four-year period from the assessment year 2011-12. The court noted that for the Assessing Officer to exercise the power of reassessment beyond this period, there must be a failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. This requirement is embedded in Section 147 of the Income Tax Act and is considered mandatory by various judgments of the High Court and Supreme Court.

2. Alleged failure by the assessee to disclose fully and truly all material facts:
The Assessing Officer's reasons for reopening the assessment were scrutinized. It was observed that the reasons recorded referred extensively to the information and material already present in the record of the assessment year in question. The court emphasized that the reasons for reassessment began with the phrase "On perusal of the record for the assessment year 2011-12, the following issues were found," indicating reliance solely on existing records. The court concluded that there was no new material or information outside the record that the Assessing Officer had used to justify the reopening. Consequently, there was no failure on the part of the assessee to disclose all material facts fully and truly.

3. Specific grounds for reassessment cited by the Assessing Officer:
The Assessing Officer cited several grounds for reassessment, including:
- Ineligibility of deductions claimed under Sections 80IB and 80IC for certain units due to the nature of manufacturing activities.
- Disallowance of capital advance written off.
- Incorrect set-off of Long Term Capital Gain (LTCG) against brought forward long-term capital loss.
- Excess deduction allowed due to incorrect reallocation of rent and storage charges.
- Incorrect reduction of Rs. 42.75 crore from net profit.
- Incorrect allowance of provision for impairment of a trademark.

The court found that all these grounds were derived from the existing records of the assessment year 2011-12. The Assessing Officer's belief that income had escaped assessment was based on the scrutiny and verification of these records, not on any new information. The court highlighted that the Assessing Officer had acted on the information available from the record of the assessment, which did not satisfy the condition of failure to disclose material facts by the assessee.

Conclusion:
The court quashed the impugned notice for reopening the assessment, stating that the Assessing Officer could not justify issuing the notice beyond the four-year period from the end of the relevant assessment year. The petition was allowed and disposed of accordingly.

---