The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the re assessment without satisfying conditions of Section 147 of the Income Tax Act 1961 would be invalid.
the assessee Jan De Nul Dredging is engaged in the business of dredging services and filed its return of income for the assessment year 2011-12 on 30.11.2011 the case was selected for scrutiny and notice under section 143(2) and 142(1) of the Income Tax Act was issued. The assessment was completed on 31.03.2015.
Thereafter, the Assessing Officer issued notice under section 148 of the Income Tax Act for reopening of assessment under section 147 of the Income Tax Act the Assessing Officer completed the assessment under section 143(3) r.w.s. 147 of the Income Tax Act dated 20.07.2018 and made certain additions/ disallowances.
Hema Bhupal, on behalf of the revenue submitted that the Commissioner of Income Tax (CIT(A)) was not correct in invalidating the reopening of assessment order passed under section 143(3) read with Section 147 of the Income Tax Act.
Ashik Shah on behalf of the assessee submitted that,reopening notice issued under section 148 of the Income Tax Act was beyond four years from the relevant assessment year and therefore the same would be invalid. He also pointed out that the assessee had furnished all details as called for in response to the notices and there was no failure on the part of the assessee to disclose all the details.
The Division Bench of V. Durga Rao, (Judicial Member) and G. Manjunatha, (Accountant Member) dismissed the appeal filed by the revenue holding that the reasons recorded in the present case had not met the conditions stipulated under section 147 of the Income Tax Act.
Since action under section 147 of the Income Tax Act was initiated after four years from the end of the relevant assessment year, both the conditions provided in section 147 of the Income Tax Act should have been satisfied for the reopening proceedings to be held as valid.
“The reasons recorded to reopen the assessment, the Assessing Officer had mentioned failure on part of the assessee to disclose fully or truly all material facts. the second condition was not satisfied in the instant case as the assessee had disclosed fully and truly all necessary material facts in the course of original assessment proceedings and the Assessing Officer had verified the details filed by the assessee and completed the assessment order under section 143(3) r.w.s. 144C of the Income Tax Act dated 31.03.2015”, the bench observed.
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