Reopening under Sections 147 and 148 quashed for being beyond four years without any disclosure failure shown

HC quashed the reopening of assessment u/s 147 initiated beyond four years on the ground of alleged bogus share capital and premium received from paper companies. The Court held that the proviso to s.147 bars reopening after four years unless there is failure by the assessee to fully and truly disclose all material facts. The recorded reasons did not identify any specific material fact not disclosed. Based on the original assessment record and concurrent findings of CIT(A) and ITAT, HC found no such failure. There was also no material to show the assessee knew the entries were bogus. Notice u/s 148 was set aside.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Alleged failure of the petitioner to disclose fully and truly all material facts necessary for assessment.
3. Whether the reopening of assessment was based on a change of opinion.
4. Examination of fresh information as tangible material for reopening the assessment.

Issue 1: Validity of the Notice Issued Under Section 148
The petitioner challenged the notice dated 19th March 2019 issued by respondent no. 3 under Section 148 of the Income Tax Act, 1961, arguing that the reopening of the assessment was not based on "reasonable grounds" but rather on mere suspicion and vague information. The court found that the reasons for reopening did not specify what material facts were not disclosed by the petitioner, thereby invalidating the notice.

Issue 2: Alleged Failure to Disclose Material Facts
The petitioner contended that all necessary details regarding share and premium money were furnished during the original assessment proceedings. The court noted that during the original assessment, the petitioner had provided detailed information and documents, including valuation reports and explanations for the share premium. The court concluded that there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment.

Issue 3: Change of Opinion
The petitioner argued that the reopening of the assessment was a clear case of change of opinion. The court observed that the original assessment order had already examined the issue of share capital and premium, and the addition made by the Assessing Officer (AO) was deleted by the Commissioner of Income Tax (Appeals) [CIT(A)] and upheld by the Income Tax Appellate Tribunal (ITAT). The court held that the reopening of the assessment on the same grounds constituted a change of opinion, which is not permissible.

Issue 4: Fresh Information as Tangible Material
The respondents claimed that fresh information received from the Deputy Commissioner of Income Tax, Central Circle-3(1), Kolkata, indicated that the petitioner had taken accommodation entries from shell companies. The court found that the reasons to believe did not provide any specific material fact that the petitioner failed to disclose. The court also noted that even if the reopening was within four years, the fresh information might have qualified as tangible material, but since it was beyond four years, the reopening was invalid.

Conclusion
The court quashed and set aside the notice dated 19th March 2019 issued under Section 148 of the Act, as well as the order on objections dated 14th August 2019 and the assessment order dated 7th September 2021. The court clarified that all rights and contentions of the parties are kept open to be raised in the pending appeal challenging the ITAT's findings.

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