2024 (9) TMI 1670 - HC - Income Tax

Reassessment proceedings under sections 147-148 invalid when based on re-appreciation without fresh evidence or undisclosed facts

The Rajasthan HC held that reassessment proceedings under sections 147 and 148 were time-barred and invalid. The court found that the assessee had fully ... Validity of reassessment proceedings - notice issued u/s 147 r/w 148 of the Act was time barred - as also argued reasons which were the foundation for issuance of notice u/s 147 r.w.s.148 were not the result of any fresh information or fresh gathering of the material, but it is the change of opinion or re-appreciation of material - HELD THAT:- he extended limitation under the first proviso to Section 147 of the Act would apply to the cases where there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment of the relevant assessment year. The assessment proceedings and the nature of facts disclose by the assessee clearly show that he has disclosed the acquisition of capital gains and drawing of the FDR. Such FDR was also verified by the Assessing Officer with the bank. There is no failure on the part of the assessee in disclosing the material facts necessary for the relevant assessment year. Therefore, invocation of present petition is barred by first proviso to Section 147 of the Act. No proper reason which led to issuance of notice dated 26.03.2015 - A glance of the reasons discloses that there were no fresh facts received which could not be made available earlier on account of concealment of any material facts by the assessee and it appears to be a change of opinion on re-appreciation of evidence or material, which facts were already furnished by the assessee during his regular assessment process. Therefore, on this count also, the writ petition is liable to be allowed. Assessee appeal allowed. Issues:1. Challenge to notice under Section 147 and 148 of the Income Tax Act, 1961.2. Assessment of capital gains and tax liability for the assessment year 2008-2009.3. Validity of reasons for issuing notices.4. Bar on limitation for reassessment under Section 147 of the Act.5. Disclosure of material facts by the assessee.Analysis:1. The petitioner challenged the notice issued under Section 147 and 148 of the Income Tax Act, 1961, regarding assessment for the year 2008-2009, claiming a bona fide mistake in the initial return regarding capital gains. An amended return was filed, disclosing capital gains and tax paid for the subsequent year. The petitioner argued that the notices were time-barred and based on a change of opinion without fresh information.2. The Assessment Officer had passed an order in 2010, stating that the FDR under the capital gains scheme was not utilized for the prescribed purpose within the stipulated time, leading to tax liability in the following year. The petitioner contended that all relevant facts were disclosed during assessment, and the tax was paid accordingly. The audit objection in 2015 regarding non-payment of tax for 2008-2009 led to the issuance of notices, which the petitioner argued were unjustified.3. The contention revolved around the limitation period under Section 147 of the Act, which restricts reassessment after four years unless there is a failure to disclose material facts. The petitioner maintained that all necessary facts were disclosed during the assessment process, and the notices were issued without fresh information, constituting a change of opinion rather than a valid reason for reassessment.4. The court examined the provisions of Section 147 and noted that the petitioner had disclosed the acquisition of capital gains and the FDR details during assessment. The assessment order clearly showed verification of these facts by the Assessing Officer. Therefore, the court held that there was no failure on the part of the assessee to disclose material facts necessary for assessment, barring the invocation of the petition under the first proviso to Section 147.5. The court also scrutinized the reasons for issuing the notices and found that they were not based on fresh facts but seemed to be a re-appreciation of evidence already on record. As a result, the court allowed the writ petition, quashing the impugned notices dated 26.03.2015 and 27.02.2015, in favor of the petitioner.