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Facts
The assessee, an HUF engaged in wholesaler, transporter, and lease rent business, filed its return for AY 2012-13. An initial assessment was completed u/s 143(3). Subsequently, the case was reopened u/s 147 by issuing a notice u/s 148, leading to a reassessment order which was upheld by the CIT(A). The reopening was based on a discrepancy between the bank statement and the audited turnover, but the assessee contended it was beyond 4 years and lacked a failure to disclose material facts.
Held
The Tribunal held that the reassessment proceedings initiated under Section 147 were bad in law because the Assessing Officer, while issuing the notice, did not specify any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Relying on Supreme Court precedent, the Tribunal stated that such a condition is essential for reopening a completed assessment after four years. Consequently, the reassessment proceedings were set aside, and the Assessing Officer was directed to delete the addition.
Key Issues
Whether reassessment proceedings initiated beyond four years from the end of the relevant assessment year are valid in the absence of a specific allegation that the assessee failed to disclose all material facts truly and fully.
Sections Cited
250, 143(2), 142(1), 143(3), 147, 148, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, RANCHI
Before: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahay
order
: July 2nd , 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against an order dated 07.10.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
Brief facts of the case are that the assessee is HUF and engaged in the business of wholesaler, transporter, lease rent. The assessee filed return of income for the assessment year 2012-13 by declaring total income of Rs.16,72,850/-. The case of the assessee was selected under CASS followed notices issued u/s 143(2) and 142(1) of the Act and assessment was completed u/s 143(3) on 25.03.2015 with assessed income of Rs.16,89,850/-. Subsequently, the case of the assessee was reopened u/s 147 by issuing notice u/s 148 of the Act. The assessee sought reasons recorded for reopening, however the Assessing Officer rejected such request stating that the assessee failed to file return in Sunil Kumar Choudhary HUF response to notice u/s 148. Subsequently, the Assessing Officer made the assessment u/s 144 r.w.s. 147 of the Act on 29.10.19 assessing total income of assessee of Rs.3,71,59,193/-. 4. Dissatisfied with the above order, the assessee preferred an appeal before the ld. CIT(A) against the reassessment order, where the ld. CIT(A) dismissed the appeal of the assessee and upheld the reassessment order passed by the Assessing Officer.
Aggrieved by the said order, the assessee filed the present appeal before this Tribunal raising various grounds. However, the assessee primary contention is that the reassessment proceedings u/s 147 was beyond 4 years from end of the relevant assessment year, therefore, it is invalid order in law as there was no failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. He stated that assessment order u/s 143(3) had already completed on 25.03.05 after verification of document filed by the assessee, therefore, there was no occasion to make further reassessment u/s 148 of the Act. The ld. AR also stated that as per proviso to section 147 where assessment has been completed u/s 143(3), no action can be taken u/s 147 after four years unless there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. The ld. AR in order to substantiate his contention relied on the reasons recorded by the Assessing Officer, which is as under:
Sunil Kumar Choudhary HUF Sunil Kumar Choudhary HUF 5.1 The ld. AR further stressed that in the present case, on going through the reasons recorded for reopening, it is seen that there was no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Since no such failure has been established, the condition laid down in first proviso to section 147 of the Act is not satisfied and therefore reopening of assessment is not sustainable. 5.2 In this respect, the ld. AR relied on the judgment of Hon’ble Supreme Court as in the case of Ganga Saran & Sons (P) Ltd. vs. ITO (1981) 130 ITR 1, where it was held that mere change of opinion or vague assumption of the Assessing Officer is not a valid ground for reopening completed assessment, it must be based on failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment.
On the other hand, the ld. DR supported the decisions rendered by the authorities below.
We, after hearing of both the parties and perusing the materials available on record, find that the Assessing Officer while issuing notice u/s 147 of the Act nowhere stated that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment, therefore, the reassessment order framed by the Assessing Officer is bad in law. We rely on the judgment of Hon’ble Supreme Court as in the case of Ganga Saran & Sons (P) Ltd. vs. ITO (supra). The Assessing Officer failed to specify such fact in reason recorded and there was nothing on record at the time of issuing of notice u/s 147 of the Act thus failure on the part of assessee to disclose truly and fully all material facts necessary for the framing of original Sunil Kumar Choudhary HUF assessment order. Therefore, we set aside the reassessment proceedings and direct the Assessing Officer to delete the addition.
In the result, the appeal of the assessee is allowed.
Kolkata, the 2nd July, 2025.