The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Export-Import Bank of India by quashing the re-assessment notice since Revenue couldn’t establish that the escapement of income was due to the failure of full and true material facts on the part of the Assessee.
The assessee in the case is a bank filed its return of income for the relevant assessment year and disclosed a total income of Rs. 153,22,95,562. While completing the assessment under section 143(3) the Assessing Officer (AO) recomputed the total income at Rs. 205,35,29,372.
He observed that the Assessee was allowed a total deduction under section 36(1)(viia) of the Income Tax Act 1961 was Rs.57,50,00,000 and it has found that there was the excess allowance of deduction under the said section amounting to Rs.5,57,64,672 in the computation of deduction in terms of long-term finance. Thus he was of the view that income to the tune of Rs.5,57,64,672 has escaped assessment resulting in short levy of tax. Therefore the AO has issued a notice to reopen the assessment under section 147 of the Income Tax Act 1961.
On appeal, the CIT(A) dismissed the submission of the Assessee against the notice of re-assessment issued by the AO by holding that there was failure on the part of the assessee to disclose fully and truly the material fact in respect of the nature of finance made by it for claiming deduction under section 36(1)(viii) in the return of income or even in the assessment proceedings.
Thereafter, the Assessee was on further appeal before the Tribunal and counsel for the Assessee advocate Dinesh Vyas submitted that there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment and also proved that there was no tangible material before the AO for reopening the assessment.
After considering the rival submissions of both the parties, the Tribunal bench including Judicial Member D.T.Gargasia and Accountant Member N.K.Pradhan observed that “notice for reassessment issued after four years from the end of the relevant assessment year is unsustainable where there is no material to hold that there was a failure on the part of the assessee to disclose true and full facts resulting in escapement of income. The reason that some material which was available on record while making the assessment order was inadvertently excluded from consideration, was held to be a re-opening merely on change of opinion and not valid”.
The division bench further observed that, while perusing the material facts on records it can be concluded that the AO has not established that the escapement of income was by reason of failure on the part of the assessee to disclose fully and truly all material facts for claiming deduction under section 36(1)(viii) of the Act. The bench said while quashing the notice issued by the AO for reassessment.
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