Four year limitation period specified under section 147 of the Income Tax Act, 1961 is not merely a Rule; it is an exception, said Delhi High Court.
A bench of Justices S. Muralidhar and Prathibha M Singh was hearing an appeal filed by M/s Unitech Limited, where the petitioner-Company challenged the validity of a re-assessment order passed under section 147/148 of the Income Tax Act issued against them after four years of completion of original assessment.
For the Revenue, it was contended that there is no need to satisfy the conditions for reopening an assessment beyond the four-year period. According to them, the impugned order has to be treated as a notice issued within the four year period. It said that the mentioning of the first proviso to Section 147 in the order dated 3rd September, 2014 of this Court was only in the context of Section 143 (3) of the Income Tax Act.
Overruling the contentions of the department, the bench said that “the wording of this provision makes it clear that reopening of assessments after a period of four years, ought to be an exception and not the rule. The purpose of this provision is to ensure that there is some finality which is attached after the period of four years, for assessments which have been completed under Section 143 (3) of the Income Tax Act. The AO has to necessarily record that there has been a failure on the part of the Assessee to disclose fully and truly all material facts necessary for his assessment, failing which the reopening of the assessment cannot be triggered.”
Read the full text of the Order below.
