Law: Income Tax Act, 1961

Section: 147,148

Income-tax---Reassessment---Limitation--Failure to disclose material, facts---Facts recorded as reasons to reopen assessment recorded and considered in assessment order--No failure to disclose material facts---Reassessment after four years not permissible---Indian Income Tax Act, 1961, S.147. The Assessing Officer, issued notice proposing to reopen the assessment for the assessment year 198788, on the ground that although the assessee had agreed to purchase certain land at Rs.1.75 lakhs from the owners, it claimed to have paid Rs.7 lakhs to the seller and Rs.75,000 to the third party, thus, inflating the cost price of the land in question which formed part of stock-in-trade of the assessee, which in turn resulted in reducing the profit. On a writ petition: Held, allowing the petition, that a perusal of the assessment order for 1987-88 showed that there was, an agreement to purchase the land in July, 1980-81 for Rs:1,75,000, that ultimately as a result of a civil suit the assessee had paid Rs.7,00,000 to the original seller and Rs.75,000 to the third party with whom the original seller had entered into an agreement to sell, subsequent to that with the assessee. Thus, the facts which formed the basis for formation of belief as y to the satisfaction of the Assessing Officer about escapement of assessment were all disclosed during the course of assessment proceedings for the assessment year 1987-88. Therefore, this was not a case where the escapement of income from assessment was on account of failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment year 1987-88. The notice initiated action on June 27, 1983, beyond four years from the end of the relevant assessment year and the, Assessing Officer had no jurisdiction td proceed further in furtherance of that notice. THIS JUDGMENT DELIVERED BY: The Petitioner-assessee challenges the notice under section 148 of the Income Tax Act, 1961, dated June 27, 1993, for reopening of the assessment for the assessment year 1987-88. The reasons that were recorded before assuming jurisdiction for issuing notice under section 148 were furnished to the assessee and were…

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