Bombay HC Quashes Assessment Notice u/s 148 Income Tax Act on Absence of Failure on part of assessee to Truly and Fully Disclose Material Fact [Read Order]

The Bombay High Court quashed assessment notice issued under Section 148 of the Income Tax Act, 1961 on absence of failure on the part of the assessee, Shree Realtors Private Limited, to truly and fully disclose material fact.

The petitioner is engaged in the business of real estate and was regularly assessed to tax. For A.Y.2012-2013, petitioner had filed its return of income declaring an income of Rs.1,05,318/- and had shown the said income under the head “Profit and Gains from Business and Profession”.

The return of income was initially processed under Section 143(1) of the Income Tax Act. Subsequently, petitioner’s case was selected for scrutiny under Computer Aided Scrutiny Selection (CASS) norms and statutory notices under Section 142(1) and 143(2) of the Income Tax Act were issued to petitioner.

The petitioner received a notice under Section 148 of the Income Tax Act in which it is stated that there were reasons to believe that income chargeable to tax for A.Y.-2012-2013 has escaped assessment. As required, petitioner provided all information and material called for as per the notice. Petitioner was provided a copy of the reasons to believe recorded for initiating reassessment proceedings under Section 147 of the Income Tax Act.

The issue regarding subscription of shares has been thoroughly examined by the AO, who also in fact, did not accept petitioner’s explanation and added the amount of Rs.3,00,00,000/- to petitioner’s income. That addition was deleted by CIT(A) and the order of CIT(A) has been upheld by ITAT. All these only goes to prove that there was no failure on the part of petitioner to truly and fully disclose material facts.

As Section 147 of the Income Tax Act is very clear that no action shall be taken under the said Section after the expiry of 4 years from the end of the relevant assessment years unless any income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts

A Division Bench comprising of Justices KR Shriram and Firdosh P Pooniwalla observed that “First of all, it is not spelt out in the reasons to believe as to what was the material fact which was not truly and fully disclosed. Further, having considered the submissions of petitioner during the course of original assessment proceedings and the findings of CIT(A) as well as ITAT, we are also satisfied that there was no failure on the part of petitioner to disclose fully and truly any material fact.”g

To Read the full text of the Order CLICK HERE

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