INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Reopening of assessment after expiry of four years - True and full disclosure

Assessee was engaged in carrying on wholesale business in footwear, apparel and support equipments of Nike Brand in India. It was a wholly owned subsidiary of Nike holding BV, Netherlands, which, in turn, was held by Nike Inc., USA. Assessee was aggrieved by action of AO in reopening assessment after expiry of four years from end of relevant assessment year without mentioning that there was failure on part of assessee to disclose truly and correctly all material facts necessary for assessment. Held: It is imperative on part of AO to show that there was failure on assessee's part to disclose fully and truly all material facts relating to assessment. Admittedly, no such allegation was made by AO in reasons recorded for reopening of assessment. When there is no failure on the part of the assessee, the reopening of assessment after expiry of four years is bad in law. Further, TPO/AO took a conscious decision on issue on basis of explanations furnished by assessee. Having taken a conscious decision, it was not permissible for AO to take a different view on basis of subsequent decision of Tribunal, after expiry of four years from the end of relevant assessment year. Since reopening of assessment was bad in law for more than one reason, therefore, assessment order was liable to be quashed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11, 2011-12, 2007-08, 2012-13 & 2014-15

INCOME TAX ACT, 1961

Section 92C

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