| The Tax Publishers2020 TaxPub(DT) 0035 (Del-HC) : (2020) 421 ITR 0059 : (2020) 312 CTR 0514 INCOME TAX ACT, 1961
Section 148 Section 147 Proviso
It became evident on perusal of scrutiny questionnaires issued by AO and information furnished in response thereto by assessee that there had been no failure on the part of assessee in furnishing inforamtion. On the other hand, there appeared to be non-application of mind on such material on apart of AO to make an appropriate determination in accordance with law. Thus, AO could not now review its decision, having failed to perform its statutory duty and therefore, reopening was nothing but a change of opinion not sustainable in law.
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Reassessment - Notice issued beyond four years - No failure to disclose fully and truly all material facts -
AO issued notice under section 148 after expiry of four years from the end of relevant assessment year on the ground that External Development Charges (EDC) as paid to Haryana Urban Development Authority (HUDA) were subjected to TDS under section 194 and in absence of TDS, amount would be subject to disallowance under section 40(a)(ia) and as a result, income had escaped assessment. Assessee submitted that test for reopening of assessment as per proviso to section 147 had not been met. Questionnaire raised by AO during original assessment proceedings categorically adverted to question of withholding tax and details of TDS paid and EDC charges were available to AO. Revenue's case was that even if AO have, with due diligence, discovered material from tax audit report, it did not necessarily mean that assessee had made a full and true disclosure of material facts. Mere production of evidence before AO was not enough and there might be a failure to make full and true disclosure, if some material for assessment lay embedded in that evidence which AO could uncover, but did not do so.Held: Burden was equally placed on AO to exercise due diligence in examining the record (account books or evidence) produced before him in light of declarations made in return or responses to notices or questinnaires. This was necessary as AO had to gather 'tangible' material which was a pre-requisite for reopening under section 147. It became evident on perusal to scrutiny questionnaires issued by AO and information furnished in respone thereto by that there had been no failure on the part of assessee in furnishing information. On the other hand, there appeared to be non-application of mind on such material on apart of AO to make an appropriate determination in accordance with law. Thus, AO could not now review its decision, having failed to perform its statutory duty and, therefore, reopening was nothing but a change of opinion. Also, section 148 notice did not state that EDC charges collected by HUDA had not been subjected to tax as income in the hands of HUDA. This further showed non-application of mind by AO, therefore, reopening was invalid.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
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