By Vijay Pal Dalmia, Advocate
Supreme Court of India & High Court
Partner Vaish Associates Advocates
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In the case of Best Cybercity (India) Pvt. Ltd. Vs Income Tax Officer, Ward 4(3) & anr., Delhi High Court summarized the requirements for re-opening of the assessment beyond 4 years in the case of assessment made under section 143(3) of the Income Tax Act.
The requirement of the law in a case where the original assessment is under Section 143(3) of the Act and the re-opening of the assessment is beyond four years is well settled in a large number of cases, including CIT v. Kelvinator of India Ltd. (supra) and may be summarized thus:
- There must be tangible material that leads an AO to form reasons to believe that income chargeable to tax for the AY Year concerned has escaped assessment.
- The AO‟s reasons must not be based on a mere change of opinion. Sections 147/148 of the Act cannot be invoked to overcome an oversight, inadvertent error and/or mistake in the original assessment order.
- Where the original assessment is under Section 143(3) of the Act and is sought to be reopened beyond a period of four years from the end of the relevant AY, then in terms of the first proviso to Section 147 of the Act it must be additionally shown that the escapement of income was either on account of the Assessee's failure to file a return under Section 139, or in response to a notice under Sections 142(1) or 148 of the Act or failing to disclose fully and truly all material facts necessary for the assessment.
- The reasons for re-opening the assessment must themselves contain all of the above elements. In other words the factum of the existence of tangible material and the recording of the satisfaction of the AO about the failure by the Assessee to disclose fully and truly all material facts necessary for the assessment must find place in the reasons recorded for re-opening the assessment. The deficiency in this regard cannot be sought to be made up by a counter affidavit filed in the Court in response to a petition questioning the reopening of the assessment
The judgment can be read by clicking on the following link:
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