Reopening beyond 4 years on basis of retrospective amendment not justified if assessee has not failed to disclose material facts
In respect of AY 2003-04, the assessee claimed deduction u/s 80IA (4) which was partly allowed by the AO vide assessment order passed u/s 143(3). Subsequently, a retrospective amendment was made to s. 80IA by the Finance (No. 2) Act, 2009 w.e.f 1.4.2000 to provide that s. 80IA deduction would not be admissible to an assessee who carries on business which is in the nature of works contract. After the expiry of 4 years from the end of the assessment year, the AO reopened the assessment u/s 147 to deny the deduction u/s 80IA in view of the retrospective amendment. The assessee challenged the reopening by a Writ Petition. The department argued that the by virtue of the retrospective amendment, it had to be deemed that the assessee had submitted untrue facts at the relevant time and that s. 147 was attracted. HELD allowing the Petition:
Under the first proviso to s. 147 where an assessment has been made u/s 143(3), the assessment cannot be reopened after expiry of four years from the end of the relevant assessment year unless if income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In the present case, there was no failure on the part of the assessee to make a full and true disclosure of the material facts. The argument that in view of the retrospective amendment of section 80IB, it is deemed that the petitioner has failed to disclose the correct facts is not acceptable. The question whether there is a failure to disclose all material facts is a matter of fact and there can be no deemed failure as contended by the department. Consequently, in the absence of any failure on the part of the assessee to make a full & true disclosure of material facts, the initiation of proceedings u/s 147 was vitiated and could not be sustained.