INCOME TAX ACT, 1961

Section 147

Reassessment - Beyond four years - No failure to disclose fully and truly all material facts -

AO received information from Investigation Wing as to assessee having obtained bogus accommodation bills. Accordingly, AO reopened assessment after expiry of four years from the end of relevant assessment year and made addition on account of bogus purchases. Assessee challenged validity of reopening taking plea of proviso to section 147. Held: Even though reassessment was initiated, based on the 3rd party information/agency, it was duty of AO to verify the information supplied by outside agency and also it was duty of AO to bring on record the failure on the part of assessee to disclose fully and truly all material facts necessary for assessment under consideration, in relation to information received from external agencies, Considering the fact that the assessment was reopened beyond 4 years. Assessee had filed its return of income and the same was taken up for scrutiny and assessment under section 143(3) was completed and nowhere notice issued under section 148 disclosed the fact of any failure on the part of assessee. Even in the reassessment order AO had not brought on record any failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, reopening of assessment beyond four years was hit by proviso to section 147 and, was, therefore, set aside.

Followed:Pr. CIT v. Light Carts (P) Ltd. (2017) 85 Taxmann.com 331 (All-HC) : 2017 TaxPub(DT) 4369 (All-HC) and Hindustan Lever Ltd. v. R.B. Wadkar (2004) 137 Taxman 479 (Bom-HC) : 2004 TaxPub(DT) 1424 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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