Titanor Components Limited vs. ACIT (Bombay High Court At Goa)

DATE: (Date of pronouncement)
DATE: June 27, 2011 (Date of publication)

Click here to download the judgement (titanor_147_reopening.pdf)

Despite “Wrong Claim”, s. 147 reopening invalid if failure to disclose not alleged

The AO reopened the assessment after the end of 4 years from the assessment year on the ground that the assessee had “wrongly claimed deduction u/s 80IA” and that “long term capital gains had been wrongly set-off”. There was no allegation in the recorded reasons that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The assessee filed a Writ Petition to challenge the reopening. HELD quashing the s. 148 notice:

There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts. It is only in the latter case that the AO is entitled to proceed u/s 147. The power conferred by s. 147 does not provide a fresh opportunity to the AO to correct an incorrect assessment made earlier unless the mistake in the assessment so made is the result of a failure of the assessee to fully and truly disclose all material facts necessary for assessment. Further, it is necessary for the AO to first state that there is a failure to disclose fully and truly all material facts. If he does not record such a failure he would not be entitled to proceed u/s 147. (Hindustan Lever 268 ITR 332 (Bom) followed).

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