Bhartiya Samruddhi Finance Ltd. v. DCIT

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The Tax Publishers2022 TaxPub(DT) 0019 (Del-Trib)

INCOME TAX ACT, 1961

Section 147, Proviso

Since there was no allegation by AO of any failure on part of assessee to disclose fully and truly all material facts necessary for completion of assessment and there was no tangible material for belief that income chargeable to tax has escaped assessment, therefore, reassessment proceedings initiated after a period of four years from the relevant assessment year were not in accordance with Law.

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

AO reopened assessment after expiry of four years from the end of relevant assessment year on the reasoning that revenue subsidy amounting to Rs. 1,07,00,000 given to the assessee for assisting him in carrying out business operations was not taxed as revenue receipts. The same resulted in underassessment of income involving short levy of tax of Rs. 48,15,702 including interest. Held: Original assessment was completed under section 143(3) and assessee had given sufficient information of all the primary facts regarding the amount of Rs. 1.07 crores subsidised by Sharecap Exchange, Chicago, USA towards Risk Management, Strengthening Middle Management and Business Process Reengineering of the company operations. The primary facts were already disclosed in the Notes to Accounts filed along with balance-sheet which was the subject-matter of reopening of assessment and since original assessment was completed under section 143(3) and since there was no allegation by AO of any failure on part of assessee to disclose fully and truly all material facts necessary for completion of assessment and there was no tangible material for belief that income chargeable to tax has escaped assessment, therefore, reassessment proceedings initiated after a period of four years from the relevant assessment year were not in accordance with Law.

Relied:CIT v. Kelvinator of India Ltd., (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC) and Haryana Acrylic Manufacturing Co. v. CIT (2009) 308 ITR 38 (Del-HC) : 2009 TaxPub(DT) 1007 (Del-HC).

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