Notice issued by AO After 4 years of  Reassessment u/s 148 under : ITAT [Read Order]

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) held that notices issued by assessing officer after 4 years of re-assessment under Section 148 of Income Tax Act, 1961 is invalid.

M/s. ECI Engineering & Construction Co., Ltd, the Respondent Assessee was a company engaged in the business of civil contracts. The aseessee filed the appeal against the upholding  decision of the Assessing Officer in treating sale of partly paid up shares as fully paid and confirming the addition of income as long term capital gain.

The Commissioner of Income Tax(Appeals) erred in confirming the addition of difference of prior period income and deleting disallowances of depreciation on discarded assets. The assessee submitted that the notice was issued by Assessing Officer  under Sections 147 / 148 of the  Income Tax Act to the assessee  for re-assessment after 4 years was due to a change of opinion and not based on new information.

The counsel for the Assessee contended that the  Commissioner of Income Tax(Appeals) and Assessing Officer must satisfy themselves that there was a failure on the part of the assessee to disclose all the material facts, and that the additions were made on account of Audit Objections.

Also submitted that  the re-opening of the assessment was taken place beyond a period of 4 years and the assessing officer has not recorded that there was any omission or failure on the part of the assessee to disclose fully and truly all the material facts for the completion of assessment.

The tribunal observed that the Assessing Officer's reopening of the assessment beyond a period of 4 years is not in accordance with the law and the consequential assessment is bad in law. The Revenue authorities failed to take cognizance of the proposal date, leading to a conclusion that the reopening was made beyond 4 years without recording satisfaction by the Commissioner of Income Tax.

The two member Bench comprising of M/s.  Laliet Kumar (Judicial) And  M/S Rama Kanta Panda (Accountant) held that the satisfaction as contemplated under Section 151 of the  Income Tax Act, 1961 is not an empty formality as the authorities have to apply their mind and record satisfaction.

It was also observed that the Assessing Officer had failed to issue notice beyond a period of 4 years after recording due satisfaction in the eyes of law.

Thus, the appeal of the assessee was allowed and the appeal of Revenue was dismissed.

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The Asst. Commissioner of Income Tax vs M/s. ECI Engineering & Construction Co., Ltd , 2023 TAXSCAN (ITAT) 1164 , M/s. ECI Engineering & Construction Co., Ltd., , The Asst. Commissioner of Income Tax