No failure on the part of the Assessee to Disclose Material Facts during Scrutiny u/s 143(3), IT Act: ITAT quashes Reopening of Assessment u/s 148 [Read Order]
No failure on the part of the Assessee to Disclose Material Facts during Scrutiny – Assessee – Material Facts – Scrutiny – IT Act – ITAT quashes Reopening of Assessment – ITAT – Taxscan
No failure on the part of the Assessee to Disclose Material Facts during Scrutiny – Assessee – Material Facts – Scrutiny – IT Act – ITAT quashes Reopening of Assessment – ITAT – Taxscan
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently while quashing the reopening assessment under Section 148 of the Income Tax Act, 1961 held that there is no failure on the part of the assessee to disclose material facts during scrutiny assessment under Section 143(3) of the Income Tax Act, 1961.
Y. Sridhar, counsel appeared for the assessee. D. Hema Bhupal, Counsel appeared for the revenue.
Assessee Ramamirtham Mangaladevi after filing the return of the income case was selected for scrutiny However, the case was reopened beyond 4 years from the end of the relevant assessment year and notice under Section 148 of the Income Tax Act was issued on 26.03.2018.
AO alleged that Long Term Capital Gains (LTCG) to the tune of Rs 11.42 Lacs was omitted to be offered by the assessee. Also, rental income of Rs.7.20 Lakhs from Kanathur Property was to be treated as the assessee’s income. Lastly, medical expenses of Rs.0.97 Lacs were not allowable under Section 37(1) of the Income Tax Act.
The Assessor objected to the reopening of the assessment. During appellate proceedings, the assessee assailed the reassessment jurisdiction on the ground that there was no failure on the part of the assessee to disclose material facts.
Without considering the submission of the assessee AO passed an assessment order. Aggrieved by the assessment order assessee filed an appeal before the CIT(A). The CIT(A) rejected the appeal filed by the assessee. Therefore the assessee filed a second appeal before the tribunal.
When the matter came before the tribunal, it was observed that the return was already scrutinized under Section 143(3) of the Income Tax Act and the reopening exercise has been undertaken for 4 years.
In such a case, one of the essential requirements is that there should be a failure on the part of the assessee to disclose fully and truly all material facts necessary for her assessment for the impugned assessment year.
In this case, there was no failure on the part of the assessee to disclose material facts necessary for her assessment.
Therefore, the notice issued under Section 148 of the Income Tax Act was barred by limitation and consequential assessment framed by AO would be a nullity.
Thus the two-member bench of Manoj Kumar Aggarwal, (Accountant Member) and Manomohan Das, (Judicial Member) observed that there is no independent application of mind by AO while recording the reasons for reopening.
It was observed that there was no new tangible material to reopen the case. Hence, the bench allowed the appeal filed by the assessee. Keywords: Income Tax Appellate Tribunal, Long Term Capital Gains, Section 148 of Income Tax Act, Section 143(3) of Income Tax Act, material facts, Scrutiny Assessment, Reopening Assessment.
To Read the full text of the Order CLICK HERE
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