Court quashes assessment notice for 2011-12 under Income Tax Act. Notice beyond time limit, lacked legal basis.

The court quashed the notice seeking to reopen the assessment for the assessment year 2011-12 under section 148 of the Income Tax Act, 1961. The court found that the notice was issued beyond the permissible period and lacked legal authority as there was no failure on the petitioner's part to disclose material facts necessary for assessment. The court concluded that the reasons recorded for reopening the assessment did not support the assumption of jurisdiction by the Assessing Officer, ultimately ruling in favor of the petitioner.

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Issues:
Validity of notice seeking to reopen assessment for assessment year 2011-12 under section 148 of the Income Tax Act, 1961.

Detailed Analysis:
The petitioner challenged the validity of the notice dated 04.12.2017 issued by the respondent under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for assessment year 2011-12. The petitioner contended that the notice was issued beyond the four-year period from the end of the relevant assessment year, invoking the first proviso to section 147 of the Act. The petitioner argued that there was no failure on their part to disclose all material facts necessary for assessment, rendering the assumption of jurisdiction by the Assessing Officer invalid. The petitioner highlighted that the reasons recorded for reopening the assessment did not mention any such failure on their part, emphasizing that the Assessing Officer's discretion under section 92C to determine arms length price in international transactions was relevant. The petitioner asserted that the notice lacked jurisdiction and should be quashed and set aside.

On the other hand, the respondent relied on the order rejecting the petitioner's objections and the affidavit-in-reply. The reasons recorded for reopening the assessment indicated international transactions with an Associated Enterprise, including corporate cost payments, leading to an alleged underassessment of income. The respondent argued that the failure to observe procedures under sections 92C and 92CA necessitated the reopening of the assessment. However, the court found that during the scrutiny assessment, the petitioner had disclosed the international transactions, as required under section 92E of the Act, for the relevant year. The court concluded that there was no failure on the part of the petitioner to disclose material facts, and the reasons recorded did not support the assumption of jurisdiction by the Assessing Officer. The court noted that the notice was issued beyond the permissible period and lacked legal authority, thus quashing the notice and allowing the petition.

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