ITAT Mumbai Quashes Reassessment Proceedings For AY 1998-99; Represented By Lakshmikumaran & Sridharan Attorneys
A recent judgment involving the validity of reassessment proceedings has been considered by the Mumbai Bench of the Income;
ITAT Mumbai Quashes Reassessment Proceedings For AY 1998-99; Represented By Lakshmikumaran & Sridharan Attorneys
Introduction
A recent judgment involving the validity of reassessment proceedings has been considered by the Mumbai Bench of the Income-tax Appellate Tribunal (“ITAT”) in the case of The Indian Hotels Company Limited, ITA No. 5653 of 2011.
Factual Background
The Assessing Officer reopened the assessment for AY 1998-99 beyond a period of 4 years. The Assessee challenged the reopening on the grounds that the Assessing Officer failed to aver the failure to fully and truly disclose all material facts and incorrectly invoked Clause (b) of Explanation 2 to Section 147 of the Income-tax Act, 1961.
Procedural Background
The case was filed by The Indian Hotels Company Limited against the reopening proceedings. The ITAT heard arguments from the Assessee and considered the evidence presented.
Issues Involved in the Case
1. Validity of Reopening: Whether the reopening proceedings were valid despite the Assessing Officer's failure to aver the failure to fully and truly disclose all material facts.
2. Invocation of Clause (b) of Explanation 2 to Section 147: Whether the Assessing Officer's invocation of Clause (b) of Explanation 2 to Section 147 was correct.
Submissions of the Parties
Assessee (The Indian Hotels Company Limited): The reopening is bad in law due to the Assessing Officer's failure to aver the failure to fully and truly disclose all material facts. The Assessee relied on Hindustan Lever Ltd. v. R.B. Badkar [268 ITR 332 (Bom)].
Revenue: The Assessing Officer had reason to believe that income had escaped assessment.
Discussion on Judgments and Legal Citations
The ITAT relied on relevant case law, including Hindustan Lever Ltd. v. R.B. Badkar [268 ITR 332 (Bom)], and considered the arguments presented by the Assessee.
Reasoning and Analysis by the ITAT
The ITAT held that the Assessing Officer was required to categorically aver the failure to fully and truly disclose all material facts necessary for framing the assessment. The ITAT also found that the invocation of Clause (b) of Explanation 2 to Section 147 was incorrect since a scrutiny assessment had already been completed u/s 143(3) of the Act.
Basis for the Decision
The ITAT's decision was based on the principles of reopening proceedings and the requirements for a valid reopening.
Final Decision
The ITAT quashed the reopening proceedings due to the Assessing Officer's failure to aver the failure to fully and truly disclose all material facts and the incorrect invocation of Clause (b) of Explanation 2 to Section 147.
Law Settled in This Case
This case establishes that the Assessing Officer must categorically aver the failure to fully and truly disclose all material facts necessary for framing the assessment for a valid reopening.
In this case, the plaintiff was represented by Team Lakshmikumaran & Sridharan Attorneys led by Senior Advocate V. Sridharan, assisted by Mr. Ravi Sawana along with Ms. Neha Sharma, Advocates. Meanwhile, the defendant was represented by Shri Hemanshu Joshi, Advocate.