Section 143(3) read with section 147 of the Income Tax Act, 1961 — Reassessment — Reopening of assessment was not justified as revenue has sought to re-surrect a stale issue which had already been examined during the course of regular assessment.[2020] 53 ITCD 076 (MAD)
Facts: The petitioner has challenged the impugned order dated 29.12.2016 passed by the revenue under Section 143 (3) r/w. Section 147 of the Income Tax Act, 1961. The impugned order was passed pursuant to the notice issued to the petitioner on 31.03.2016, being the last date on which the re-assessment could be made under the proviso to Section 147 of the Income Tax Act, 1961.
Held, that the notice under Section 148 was issued on 31.03.2016, which gives no reasons. It however records that it was issued after obtaining necessary satisfaction of the Pr. Commissioner of Income Tax-5, the Central Board of Direct Taxes (probably means necessary permission). The reasons were not communicated to the petitioner as the petitioner also did not ask for such reasons. After notice dated 31.03.2016 was issued after invoking the jurisdiction under Section 148 read with proviso to Section 147 on 08.12.2016, the petitioner was asked to explain the profit arising from the agreement and why it should be treated as business profit and not as Long Term Capital Gain as shown by the petitioner. The petitioner replied to the same on 14.12.2016. From a over all reading of the facts, it is clear that the respondent has sought to re-surrect a stale issue which had already been examined during the course of regular assessment pursuant to which assessment order was passed on 21.12.2011 but was also a subject matter of discussion pursuant to letter dated 05.02.2014 of the respondent. The last date of the assessment year 2009-10 was 31.03.2010. Therefore, the respondent was entitled to issue such a notice under Section 148 on or before 31.03.2014 i.e within 4 years for the purpose of Section 147 . Instead, the respondent failed to issue a notice in time and obtained permission from the Pr. Commissioner of Income Tax - 5, Chennai on 30.03.2016 at the eleventh hour by giving an altogether different reason for issuing notice under Section 148. The reasons given that the respondent had a belief that the income had escaped assessment for invoking Section 148 on 31.03.2016 is in complete variance with the reasons given in the impugned order dated 29.12.2016. It shows that the impugned order has been passed due to change of opinion of the respondent which was entertained on 05.02.2014. After missing an opportunity which came to the respondent within the period of 4 years seeking clarification from the petitioner, Section 148 of the Income Tax Act, 1961 was invoked. Since the invocation of jurisdiction under Section 148 for the purpose of proviso to Section 147 of the Income Tax Act, 1961 on 31.03.2016 was in variance with the so called recommendation/concurrent & permission of the Assistant Commissioner of Income Tax & Pr. Commissioner on 29.03.2016 & 30.03.2016, the impugned order cannot be sustained. It also does not state that there was failure on the part of the petitioner to disclose fully and truly all material facts necessary for the purpose of the assessment for the assessment year. In my view, the entire proceedings were based on the change of view. Further, having entertained a view as early as 05.02.2014 that amount was a business income, the respondent ought to have issued the notice on or before 31.03.2014. Instead, the respondent waited till 31.03.2016 to issue notice to the petitioner. Therefore, the impugned order cannot be sustained.