[Income Tax Act] Reassessment Beyond 4 Years Requires Specific Non-Disclosure By Assessee, Not Mere Allegations: Bombay High Court

Part 147 of the Revenue Tax Act, 1961 offers for the reopening of evaluation proceedings. This part provides discretion to the Assessing Officer (AO) to reopen the evaluation proceedings when he/she has purpose to imagine that among the revenue has escaped evaluation.

Justices B.P. Colabawalla and Firdosh P. Pooniwalla acknowledged that “it’s for the Assessing Officer to achieve the conclusion as as to if there was a failure on the a part of the Assessee to reveal absolutely and actually all materials information mandatory for evaluation for the involved evaluation yr. The Assessing Officer, within the occasion of problem to the explanations, should have the ability to justify the identical based mostly on the fabric on document.”

“What is necessary is that he should disclose within the causes as to which reality or materials was not disclosed by the Assessee absolutely and actually mandatory for evaluation of that evaluation yr, in order to determine the very important hyperlink between the explanations and the proof. That very important hyperlink is a safeguard in opposition to the arbitrary reopening of a concluded evaluation”, added the bench.

In this case, the assessee additionally challenges the Order rejecting the objections filed by the assessee to the validity of the Discover. The explanations given within the Discover for reopening the evaluation of the assessee for the AY 2013-14 was that the Assessee had claimed exemption underneath Part 10(34) of the IT Act of Rs.179.44 crores on account of dividend revenue.

Out of this whole revenue claimed as exempt, an quantity of Rs.37.10 crores was on account of receipts from an entity known as the Bharat Petroleum Company Ltd. Belief for Funding in Shares.

It was noticed that the stated Belief was shaped via a merger of Kochi Refineries Ltd. with the assessee within the yr 2006-07, and the only real beneficiary of the Belief was the assessee.

In accordance to the Assessing Officer (1^st Respondent), it’s from this Belief that the assessee (BPCL) has acquired dividend revenue to the tune of Rs.37.10 crores. For the reason that stated Belief will not be a Firm and isn’t required to declare dividend as mandated by the Firms Act, 2013, and nor was the stated Belief lined underneath Part 115-O of the IT Act, the quantities distributed by the stated Belief to the assessee didn’t qualify as exempt revenue underneath Part 10(34) of the IT Act.

In accordance to the Assessing Officer, the complete and true information regarding incomes of such revenue weren’t disclosed by the Assessee through the course of evaluation proceedings, and therefore, he had purpose to imagine that revenue to the extent of Rs.37.10 crores acquired by the assessee from the stated Belief had escaped evaluation for AY 2013-14.

The assessee submitted that the Notices issued underneath Part 148 for each the evaluation years have been past the interval of 4 years from the top of the involved evaluation yr. Additional for each evaluation years, an Evaluation Order was handed underneath Part 143(3).

The division submitted that after that is the case, and which was then flagged by the Audit, the Assistant Commissioner of Revenue Tax was definitely invested with the jurisdiction to reopen the evaluation proceedings and difficulty a Part 148 Discover. Due to this fact, there is no such thing as a “change of opinion”. The evaluation proceedings have been reopened underneath Sections 147 and 148 as a result of clearly there was a failure on the a part of the assessee to totally and actually disclose all materials information in relation to the involved evaluation yr.

The bench famous that admittedly there aren’t any particulars given by the Assessing Officer as to which reality or materials was not disclosed by the assessee that led to its revenue escaping evaluation. There may be merely a bald assertion within the causes that there was a failure on the a part of the assessee to reveal absolutely and actually all materials information, with out giving any particulars thereto.

The bench opined that “merely as a result of the Assessing Officer is now of the opinion that the deduction is wrongly granted, can’t make investments him with the jurisdiction to reopen the evaluation, particularly in a case the place reassessment proceedings are initiated when there may be already a scrutiny evaluation underneath Part 143(3) and which is after a interval of 4 years from the date of the related evaluation yr and there was no failure to reveal absolutely and actually all materials information in relation to the involved evaluation yr.”

In view of the above, the bench allowed the petition.

Case Title: Bharat Petroleum Company Ltd. v. Assistant Commissioner of Revenue Tax

Case Quantity: WRIT PETITION NO. 1752 OF 2022

Counsel for Petitioner/ Assessee: J.D. Mistri