Bombay High Court: AO Cannot Re-Open Assessment to Remedy Error Resulting from His Oversight in Assessment

Bombay High Court: AO Cannot Re-Open Assessment to Remedy Error Resulting from His Oversight in Assessment

The Bombay High Court has ruled that the Assessing Officer cannot take recourse to reopen the assessment to correct an error caused by his oversight during the assessment proceeding.

The bench of Justices K. R. Shriram and Kamal Khata has observed that the assessment cannot be reopened due to the assessee's failure to disclose all material facts. The income tax officer had material facts before making the original assessment.

The Petitioner is in the business of shares and stock broking. Petitioner is challenging the action of Respondent of issuing notice under Section 148 of the Income Tax Act, 1961 seeking to reassess Petitioner’s income for Assessment Year 2015-16.

The petioner contended that the notice under Section 148 was issued more than four years after the end of the relevant assessment year, and that an assessment under Section 143(3) of the Act had been made. The proviso to Section 147 of the Act will apply, according to the proviso, reassessment is impermissible after the expiry of four years from the end of the relevant assessment year, where assessment under Section 143(3) has been made, unless there was a failure on the part of the assessee to truly and fully disclose material facts during the assessment.

The Court held that the entire basis for forming a reason to believe there was an escape of income is from the records filed by the petitioner with the return of income there was no failure on the part of assessee to truly and fully disclose primary facts. Therefore, allowed the petition.

Case Title: Emkay Global Financial Services Limited Versus Assistant Commissioner of Income Tax