INCOME TAX ACT, 1961

--Reassessment--Full and true disclosureNotice after expiry of four years--The issue under consideration was whether AO was justified in reopening assessment under section 147 after a period of four years from end of relevant assessment year, when previously assessment was done under section 147. Revenue argued that reassessment was justified as the contents of note annexed to original assessment did not fully and truly disclose the facts. Assessee contended that it had neither suppressed nor withhold any fact or material. It further argued that AO had nowhere stated in his order that assessee had failed to disclose fully and truly all material facts which is a pre-condition for reopening of assessment, therefore, reassessment was barried by limitation and was not valid. Held: The note clearly set out the interest income earned by the STP unit and the claim of the assessee for exemption under section 10A. It is not the requirement of law that further the assessee should show the nexus between the amount claimed and 10A unit. When he had categorically stated that the interest, which is earned from STP unit, was eligible for exemption under section 10A, even that nexus was manifest. The assessing authority had not property applied his mind towards the statutory provisions and has not taken into consideration that the original assessment passed under section 143(3) which was also reopened once and adjustment was made. It was for the second time, he was raising all these objections. When admittedly the second reopening of the assessment was beyond four years, under law, it was barred by time and, therefore, reassessment was not justified.

Income Tax Act, 1961, Section 147, proviso

IN THE KARNATAKA HIGH COURT

N. KUMAR & RAVI MALIMATH, JJ.

CIT v. Hewelett Packard Digital Global Soft Ltd.

ITA No. 406/407 of 2007

19 October, 2011