INCOME TAX ACT, 1961

Section 148 Section 147

Reassessment - Validity - Applicability of proviso to section 147 - Reopening within four years--Prima facie material available with AO

Assessee was one of the group companies of BPTP Group and certain documents seized during search in case of BPTP group and Post search enquiries, revealed that group while dealing in land purchase was paying part payment at the time of execution of sale deed and the balance consideration was being invariably paid by Post Dated Cheques (PDCs) and for intervening period (i.e., period between the date of sale deed and date of encashment of PDCs) interest was being paid in cash @ 1.25% per month, on the amount of PDCs and this cash payment was not being accounted in the books of account. Assessee company had also purchased a large chunk of land and followed this modus operandi of pertaining interest on PDCs in cash and not accounting the same in books of account. Accordingly, AO reopened assessment by issuing notice under section 148, dt. 29-3-2010. Assessee challenged this on the ground that original assessment was made under section 143(3) and there was no charge against assessee that there was any failure on the part of assessee to disclose truly and fully all material facts necessary for assessment, therefore, reopening was hit by proviso to section 147.Held: As reopening of assessment had been made within four years from the end of relevant assessment year proviso to section 147 was not applicable and since there was prima facie some material to form reason to belive as to tax escapement, reopening of assessment was sustained as valid.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2006-07

INCOME TAX ACT, 1961

Section 69C

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