Gujarat H.C :The assessee contended that there was no failure on its part to disclose fully and truly all material facts necessary for its assessment for the assessment year

High Court Of Gujarat

Gujarat State Co-op. Agri. and Rural Develop. Bank Ltd. vs. DCIT

Assessment Year : 1992-93

Section : 147

Ms. Harsha Devani And H.B. Antani, JJ.

SCA No. 1988 Of 2001

January 11, 2011

JUDGMENT

Ms. Harsha Devani, J. – In this petition under article 226 of the Constitution of India, the petitioner has challenged the notice dated January 12, 2001, issued under section 148 of the Income-tax Act, 1961 (“the Act”) whereby the petitioner’s assessment for the assessment year 1992-93 is sought to be reopened.

2. Briefly stated, the facts of the case are that the petitioner is a co-operative bank. For the assessment year 1992-93, the petitioner had filed its return of income on October 30, 1992, declaring a total income of Rs. 2,77,630. The case of the petitioner was selected for scrutiny assessment and assessment was framed under section 143(3) of the Act at an income of Rs. 5,03,260. Against the said assessment order, the petitioner preferred an appeal before the Commissioner (Appeals), Ahmedabad, who, vide order dated November 15, 1995, allowed the appeal. Subsequently, the impugned notice dated January 12, 2001, came to be served upon the petitioner seeking to reopen the assessment for the assessment year 1992-93, which has given rise to the present petition.

3. It is the case of the petitioner as averred in the petition that the impugned notice, which seeks to reopen the assessment beyond a period of four years from the end of the relevant assessment year is illegal and contrary to law. According to the petitioner, the assessment framed under section 143(3) of the Act can be reopened after the expiry of the period of four years from the end of the relevant assessment year only if income chargeable to tax has escaped assessment by reason of failure on the part of the assessee : (i) to make a return under section 139 ; or (ii) in response to a notice issued under sub-section (1) of section 142 or section 148 ; or (iii)to disclose fully and truly all material facts necessary for its assessment for that assessment year. That admittedly, the first and second situations are not present in this case. It is the case of the petitioner that in the facts and circumstances of the present case, it cannot be alleged that there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year in question and as such even the third situation is not satisfied. The impugned notice is, therefore, without jurisdiction.

4. In response to the petition, the respondent has filed an affidavit-in-reply enclosing therewith a copy of the reasons recorded for reopening the assessment. However, though a specific contention has been raised by the petitioner that the reopening is bad as the same has been reopened after the expiry of a period of four years from the end of the relevant assessment year without there being any failure on the part of the petitioner to disclose fully and truly all material facts, there is no averment in the entire affidavit-in-reply dealing with the said contention. In the affidavit-in-reply, it is further stated that in the light of the decision of the Supreme Court in the case of Madhya Pradesh Co-operative Bank Ltd. v. Addl. CIT [1996] 218 ITR 438 (SC) and in the case of the Gujarat State Co-operative Bank Ltd. [2001] 250 ITR 229 (Guj), the assessment made earlier needs to be reexamined to give effect to the ratio laid down therein since the decisions were not there at the time of making the original assessment.

5. Mr. S.N. Soparkar, learned senior advocate appearing on behalf of the petitioner, submitted that in the light of the fact that the assessment is sought to be reopened beyond a period of four years from the end of the relevant assessment year, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, there is a total lack of jurisdiction on the part of the respondent to initiate proceedings under section 147 of the Act. Referring to the reasons recorded for reopening of assessment, it is pointed out that the reason for reopening of assessment is a subsequent decision of the Supreme Court in the case of Madhya Pradesh Co-operative Bank Ltd. v. CIT [1996] 218 ITR 438 (SC). Attention was invited to a decision of this High Court in the case of CIT v. Bipin Vadilal [1999] 238 ITR 1022 (Guj), wherein it has been held that where the belief as to escapement of income chargeable to tax from assessment was not entertained by the Assessing Officer on the ground that there has been failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment, but on the basis of information contained in the judgment, no proceedings can be initiated under section 148 beyond the expiry of four years from the end of the relevant assessment year. It was, accordingly, submitted that the reopening of assessment after the expiry of a period of four years from the end of the relevant assessment year is without jurisdiction. It was submitted that in any case, the decision of the Supreme Court in the case of Madhya Pradesh Co-operative Bank Ltd. v. Addl. CIT [1996] 218 ITR 438 (SC) which forms the basis for reopening of assessment by the Assessing Officer, has subsequently been overruled by a decision of the Supreme Court in the case of CIT v. Karnataka State Cooperative Apex Bank [2001] 251 ITR 194 (SC), wherein the court has held that the view taken by the Supreme Court in the case of Madhya Pradesh Co-operative Bank Ltd. [1996] 218 ITR 438 (SC), does not set down the correct law. It was accordingly urged that even on the merits, the reopening of the assessment is not sustainable.

6. On the other hand, Mr. M.R. Bhatt, learned senior advocate, appearing on behalf of the respondent, has placed reliance upon the affidavit-in-reply filed on behalf of the respondent to submit that no case is made out so as to call for intervention by this court.

7. The facts are not in dispute. The assessment year in question is 1992-93 whereas the impugned notice issued under section 148 has been issued on January 12, 2001, which is clearly beyond a period of four years from the end of the relevant assessment year. In the circumstances, for the purpose of reopening assessment, the income chargeable to tax should have escaped assessment (i) by reason of failure on the part of the assessee to make return under section 139 of the Act, or (ii) there should be failure on the part of the assessee to make a return in response to the notice issued under sub-section (1) of section 142 or section 148, or (iii) to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year. In the facts of the present case, it is an admitted position that there is no failure on the part of the assessee to make a return under section 139 or to make a return in response to the notice issued under sub-section (1) of section 142 or section 148. In so far as the third condition is concerned, namely, failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the assessment year in question, a perusal of the reasons recorded for reopening the assessment indicates that the main basis for reopening the assessment is a subsequent decision dated November 29, 2000 of this High Court in the case of Gujarat State Co-operative Bank Ltd. v. CIT rendered in Income-tax Reference Nos. 48 and 49 of 1999 ([2001] 250 ITR 229 (Guj)) and Tax Appeals Nos. 5, 6, 7, 8 and 11 of 1999 in the entire reasons recorded as well as in the entire affidavit-in-reply, there is no whisper of there being any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration. A perusal of the reasons recorded makes it amply clear that the sole basis for reopening the assessment is the subsequent decision of this High Court in the case of Gujarat State Co-operative Bank Ltd. [2001] 250 ITR 229 (Guj). In the circumstances, the facts of the present case would stand squarely covered by the decision of this court in the case of CIT v. Bipin Vadilal [1999] 238 ITR 1022 (Guj) inasmuch as the belief as to escapement of income chargeable to tax from assessment was not entertained by the Assessing Officer on the ground that there had been failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment and as such, no proceedings could have been initiated under section 148 after the expiry of a period of four years from the end of the relevant assessment year. In the circumstances, the initiation of reassessment proceedings in the case of the assessee for the assessment year under consideration is clearly barred by limitation and as such, the assumption of jurisdiction by the Assessing Officer itself is invalid. The impugned notice under section 148 of the Act, therefore, cannot be sustained.

8. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned notice dated January 12, 2001, issued under section 148 of the Act (annexure A to the petition) is hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs.

[Citation : 337 ITR 447]

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