Merely because Books of Account were available to AO not Reason for Triggering Reassessment Proceedings: Delhi HC [Read Order]

In a significant decision the Delhi High Court observed that merely because books of account were available to the Assessing Officer (AO) is not valid reason for triggering reassessment proceedings.

The petitioner had filed its Return of Income (ROI) on 28.11.2012. Via the said ROI, the petitioner declared its total income as Rs.57,37,84,404/-. The petitioner’s ROI was picked for scrutiny and accordingly, notice dated 08/08/2013 was issued under Section 143(2) of the Income Tax Act.

After more than four years had elapsed since the end of the AY in issue i.e., AY 2012-13, as alluded to above, notice dated 12.02.2019 was issued under Section 148 of the Income Tax Act concerning the claim of depreciation vis-à-vis temporary structure at the rate of 100%. The notice, however, did not allege that the petitioner had failed to fairly and truly disclose all material facts.

Since, according to the petitioner, the order dated 01.07.2019 did not constitute a speaking order, a grievance was articulated in that behalf via communication dated 02.07.2019. The AO dealt with the same via order dated 26.07.2019. In effect, the AO emphasised that the objections filed by the petitioner had been disposed of via order dated 01.07.2019.

The counsel for the petitioner submitted that since the reassessment proceedings were triggered after four years from the end of the AY in issue, the provisions of the first proviso appended to Section 147 of the Income Tax Act would also be applicable. The AO could not have triggered reassessment proceedings without fresh material coming to his notice which demonstrated that facts material for assessment were not truly and fairly disclosed by the petitioner.

A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “In our view, this is a case which involves a change of opinion notwithstanding the provision referred to by the AO in his reasons to believe recorded on 05.02.2019. The arguments advanced by Mr Singh that merely because books of account were made available to the AO and he could have discovered material evidence had he been diligent could not be the reason for not triggering reassessment proceedings against the petitioner, does not find favour with us.”

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