Law:

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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 1996-97 - In its return of income for relevant assessment year, assessee claimed deduction under section 36(1)(iii) and same was allowed by Assessing Officer in assessment order passed under section 143(3) - Subsequently, on 28-3-2003, Assessing Officer reopened assessment and disallowed deduction under section 36(1)(iii) on ground that same was wrongly allowed - Tribunal set aside reassessment order on ground that reopening of proceedings was barred by limitation - Whether since assessee had furnished complete details along with return and during course of assessment proceedings Assessing Officer had allowed deduction under section 36(1)(iii) after application of his mind, limitation beyond period of four years was not available to assessing authority for reopening assessment and, therefore, reassessment proceedings were rightly held as barred by time - Held, yes FACTS The assessee, a financial institution, derived income from interest on finances and financial assistance given to medium and large scale industries. It also derived income from dividends, securities, leasing operations, sale of shares, etc., in its return of income for the relevant assessment year. It, inter alia, claimed deduction under section 36(1)(iii) and same was allowed by the Assessing Officer in the assessment order passed under section 143(3). Subsequently, the Assessing Officer initiated proceedings under section 147 on the ground that the assessee was wrongly allowed deduction under section 36(1)(iii) and, accordingly, passed reassessment order disallowing deduction under section 36(1)(iii). On appeal, the Commissioner (Appeals) confirmed the order of the Assessing Officer. However, on second appeal, the Tribunal set aside the reassessment order on the ground that reopening of the assessment order was barred by limitation. On appeal to the High Court : HELD Admittedly, notice under section 148 was issued after the expiry of four years. The notice under the proviso to section 147 can be issued after the expiry of four years only in a case where income chargeable to…

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