Case Study: Reassessment Notice quashed by Bombay High Court

In a recent case hearing regarding the Reassessment Notice sent to an Assessee, the Bombay High Court has decided to quash the Income Tax notice issued by the Income Tax Department. This decision was made on the grounds of that the assessee has already disclosed all the related material facts and provided the ample documents during the Income Tax Assessment in full.

Facts related to the case:

1. The petitioner Ananta Landmark Private Limited has received an Income Tax Notice under Section 143(2) of the Income Tax Act, 1961 for furnishing all the documents, along with a notice under Section 142(1) for Inquiry before the Income Tax officer
2. The petitioner’s explanation and the whole computation of income were accepted by the Tax Department as it passed an assessment order for the same.
3. In the order, some credit on the paid tax totaling to Rs.42,160 was not granted to the petitioner by the department and a notice under Section 156 of the Income Tax Act, 1961 was issued for demand.
4. The petitioner clarified that the amount claimed as credit has been fully paid by them.
5. After about four years of completion of the assessment, the assessee has again received a notice u/s 148 of the Act for reassessment of income already assessed.
6. The notice issued by the Assessment Officer stated that it is to be believed by the authorities that the taxpayer or assessee (petitioner) has escaped an assessment under Section 147 of the Act for the financial year 2012-13 on their tax chargeable income.
7. The assessee has asked for reasons for reopening of the assessment from the tax authorities.
8. The respondents (Tax Authorities) in this case provided a reply to the same through letter dated 28^th May, 2019 and gave all the recorded reasons to the petitioner for reopening of the Income Tax Assessment for him.

Held by Hon’ble Mumbai High Court

1. On part of the petitioner assessee, failure or omission to disclose all the material facts and documents fully and truly, necessary for the Income Tax Assessment was made.
2. Even if a minor mistake has been done by the assessee, the precedent condition is not fulfilled to reopen any assessment beyond a period of four years.

The bench stated that-

1. They were fully satisfied by all the fully and truly furnished material facts by the petitioner during the assessment.
2. They noted that the petitioner not only submitted all the relevant and necessary material facts and documents but also the tax authority has scrutinized the income figures and documents carefully.
3. It was observed by the bench that the assessing officer has made the deductions very wisely without any hitch.
4. The reassessment notice was issued because the officer has relied upon the audited accounts andstated that the deductions made under Section 57 of the Act are not correct.

The court has finally quashed the order citing reasons that the assessee has already disclosed all the related material facts and provided the ample documents during the Income Tax Assessment in full.