Absence Of Material: Bombay High Court Quashes Reassessment Proceedings

The Bombay High Court has quashed the reassessment proceedings as the issue of "large loans and advances" was not only raised during the scrutiny assessment but also responded to by the assessee.

The division bench of Justice Dhiraj Singh Thakur and Justice Kamal Khata has observed that between the date of the order of assessment, which is sought to be reopened, and the date of the formation of the opinion, nothing new happened. There is neither new information on hand nor reference made to any new material on record.

The petitioner/assessee challenges the notice under Section 148 of the Income Tax Act, 1961, which sought to reopen the assessment. According to the AO, the reasons for reopening were an advance payment made to M/s Nancy Builders and Developers Pvt. Ltd., which remains unexplained. As a result, it was claimed that the petitioner failed to disclose fully and truthfully all material facts required for the reassessment.

The assessee contended that there was no omission on the part of the assessee to disclose fully and truly any material fact and that all material facts had been disclosed before the AO in regard to the amount, which was considered by the AO. The initiation of reassessment proceedings was nothing but a change of opinion, and there was no omission on the part of the petitioner to make disclosure of the material facts.

The court noted that the assessment is being reopened four years after the end of the relevant assessment year, 2015-16. Therefore, the jurisdictional requirement that there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment had to be established by the assessing officer.

The court ruled that if a notice under Section 148 is issued without the jurisdictional foundation under Section 147 available to the Assessing Officer, the notice and subsequent proceedings will be void and subject to dismissal in the exercise of the court's writ jurisdiction.

The court said that it was a case of absence of material and, hence, absence of jurisdiction for the Assessing Officer to initiate the proceedings under Sections 147 and 148 of the Income Tax Act.

Case Title: Konark Life Spaces Versus Assistant Commissioner of Income -Tax

Case No. - Writ Petition 2840 Of 2022

Citation: 2023 LiveLaw (Bom) 99

Date: 10.02.2023

Counsel For Petitioner: Senior Advocate K. Shivram

Counsel For Respondent: Advocate Suresh Kumar

Click Here To Read The Order