The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the penalty cannot be imposed if the assessee has disclosed full and true material facts for assessment.
The income tax return filed by the assessee was rejected by the Assessing Officer. Subsequently, the officer issued a notice under section 148 of the Act on 25.03.2013. In response to that, the assessee submitted a letter dated 30.04.2013 stating that the last return filed by it on 15.02.2008 may be treated as return filed in response to the above notice. The assessee challenged the order before the first appellate authority who nullified the order by holding that reopening is invalid as there was full and true disclosure by the assessee.
On departmental appeal, the Tribunal observed that the first proviso to s 147 provides that no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year in cases where the original assessment was under s 143(3) unless the escapement is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
“The Department, in cases under the proviso, must prove that the assessee failed to disclose fully and truly all material facts required for assessment of its income. Disclosure only pertains to facts required to be disclosed either in the return or in questions posed during the assessment proceedings. When there is no failure on the part of the assessee to disclose fully and truly all the material facts for assessment, it cannot come under the category of escapement of income,” the Tribunal said.