Reopening Beyond 4 Years Invalid if Material Facts Disclosed: Madras HC Dismisses Revenue's Appeal
The Madras High Court has dismissed an appeal filed by the Income Tax Department challenging the Income Tax Appellate Tribunal’s decision that quashed a reassessment proceeding initiated after four years on the ground that the assessee had disclosed all material facts during the original assessment. The Revenue had sought to reopen the assessment of Siva Ventures Ltd. for the...
The Madras High Court has dismissed an appeal filed by the Income Tax Department challenging the Income Tax Appellate Tribunal’s decision that quashed a reassessment proceeding initiated after four years on the ground that the assessee had disclosed all material facts during the original assessment.
The Revenue had sought to reopen the assessment of Siva Ventures Ltd. for the relevant assessment year by issuing a notice under Section 147 of the Income Tax Act, 1961 more than four years after the end of the assessment year.
Since the original assessment was completed under Section 143(3), the proviso to Section 147 required the Revenue to demonstrate that the assessee had failed to fully and truly disclose all material facts necessary for assessment.
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Before the High Court, the Revenue’s counsel relied on the decision of the Delhi High Court in Honda Siel Power Products Ltd. v. Deputy Commissioner of Income Tax, which had been upheld by the Supreme Court. However, the Madras High Court found that the facts of Honda Siel were distinguishable.
Before the High Court, counsel for the Revenue relied on the judgment of the Delhi High Court in Honda Siel Power Products Ltd. v. Deputy Commissioner of Income Tax, which was upheld by the Supreme Court.
However, the Court found that the facts of that case were not applicable here, as Honda Siel dealt with a challenge to the reopening notice under Article 226 of theConstitution, focusing solely on whether the Income Tax Officer had jurisdiction to issue such a notice.
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Accordingly, the High Court upheld the Tribunal’s finding, dismissed the Revenue’s appeal and answered the substantial question of law in favour of assessee.
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