In a recent ruling, the division bench of the Kerala High Court held that assessments completed without full and true disclosure of material necessary for assessment during the original assessment proceedings is liable to be quashed.
The decision was against an appeal preferred by the Revenue impugning the order of the Appellate Tribunal who struck down the assessment order for the reason that the assessment was completed without disclosing full and true materials.
While dismissing the appeal, the division bench comprising of Justice Thottathil B Radhakrishnan and Justice Devan Ramachandran noted that there is no error in the order of the Tribunal. Concurring with the findings of the Tribunal, the Court said that proceedings under section 147(1) of the Income Tax Act can be initiated only if the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under Section 142(1) or Section 148 of the Income Tax Act or to disclose fully and truly all material facts necessary for the assessment. “As is clearly discernible from what we have quoted above out of the order of the Tribunal, it was crystal clear for the Tribunal that the assessee had responded to the queries raised by the assessing officer in the original assessment proceedings and during the course of such proceedings had produced all material facts as were called for and were relevant and necessary for completing the assessment for the year. Under such circumstances, we are of the view that the Tribunal was abundantly justified in the facts and in the circumstances of the case in hand to have concluded that this is a case where proceedings were impermissible in view of the embargo under the first proviso to Section 147 of the Income Tax Act.”
Read the full text of the Judgment below.
