ITAT DELHI:- REASSESSMENT NOTICE  UNDER SECTION 148 IS INVALID IF ISSUED AFTER FOUR YEARS OF RELEVANT ASSESSMENT YEAR

REASSESSMENT NOTICE  UNDER SECTION 148 IS INVALID IF ISSUED AFTER FOUR YEARS OF RELEVANT ASSESSMENT YEAR

NTPC Ltd.

Vs

DCIT

(ITAT Delhi)

Appeal Number: ITA No. 3176/Del/2019

Date of Judgement/Order: 24/05/2024

Background:

NTPC challenged the reassessment proceedings initiated under Section 148, arguing that the notice was issued beyond the permissible period of four years without any failure on its part to disclose material facts.

Question

“Whether the notice issued by the revenue authorities after the expiry of four years from the end of the relevant assessment year is valid and was any there escapement of income chargeable to tax by reason of the failure on the part of the assessee or not?”

Grounds of Appeal

The assese appealed to the ITAT, raising several grounds, including:

1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO despite the fact that the reopening by the AO and consequent reassessment without complying with the statutory conditions prescribed under Section 147 read with Section 148 of the Act is bad in law.
3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO ignoring the fact that the AO has erred both on facts and in law in making reassessment under Section 147 of the Act as the reasons recorded for reopening the assessment does not meet the requirements of Section 147 of the Act.
4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the reassessment proceedings initiated under section 148 are bad in law as there is no live nexus between the reasons recorded and the belief formed by the AO
5. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the order passed by the learned AO under section 148 of the Income tax Act is barred by limitation since the same is passed beyond the specified time limit.
6. On the facts and circumstances of the case, the notice issued under section 148 is illegal having been issued on the basis of reasons containing no whisper as to how the assessee has failed to disclose fully and truly all material facts, the notice having been issued after four years from the end of the relevant assessment year.
7. (i) On the facts and circumstances of the case, the reassessment proceedings initiated by the AO and upheld by the learned CIT(A) are bad in the eyes of law, as the reasons recorded for the issue of notice under section 148 are based merely on account of change of  opinion.                                                                                               (ii) On the facts and circumstances of the case, the learned CIT(A) has erred in law and on facts in upholding the reassessment proceedings, despite the fact that there has been no omission on the part of the assessee in disclosing fully and truly all material facts necessary for the assesseement.
8. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated beyond a period of four years from the end of the relevant assessment year despite the fact that original assessment being framed under section 143(3) is bad in law in view of proviso to section 147 of the Act.
9. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the action of the learned AO under section 148 of the Income tax Act is illegal, that the same has been passed without assumption of valid jurisdiction.
10. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition of 234,54,25,745/- made by AO on account of exchange rate variation.                                        (ii)That the said addition has been confirmed arbitrarily rejecting the explanation and evidences brought on records by the assessee.
11. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the disallowance of 80,00,000/- made by AO on account of stores written off and loss on maturity of current investments.                                                                                                                                                        (ii)That the said addition has been confirmed arbitrarily rejecting the explanation and evidences brought on records by the assumption.
12. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in upholding the action of the learned AO without application of his own mind.
13. On the facts and circumstances of the case, the learned CIT(A) has grossly erred both on facts and in law in confirming the above addition by indulging in surmises and conjecture and, only on the basis of presumption and
14. On the facts and circumstances of the case, the learned CIT(A) has grossly erred both on facts and in law in confirming the action of the learned AO that the order has been passed without affording adequate opportunity of being heard to the assessee in violation of principles of natural “justice”

Important Para

Para 12. From the perusal of the record, we observe that the issue of depreciation and written o ff of stores are already part of the record before the Assessing Officer while completing the assessment u/s

143(3). The depreciation claimed is available clearly in the depreciation schedule and the writing off of stores is decipherable from the P&L account. Thus, we find that there was no failure on the part of the assessee to disclose fully and truly all the material facts required for assessment for the year. The audit party has raised objections only after going through the assessment record before them. There was no new information available to the revenue nor there was any default on the assessee to disclose all the required material facts.

Para 13. Hence, we hereby hold that the notice issued u/s 148 on 18.03.2013 after the expiry of four years from the end of the relevant assessment year, a period of 4 years for the Assessment Year 2006- 07 after completion of the assessment u/s 143(3) on 26.11.2007 is invalid and hence the entire assessment is liable to be quashed.

Para 14. We observe that the notice would have been valid, had it been issued before 31 .03 .2011 as the proviso to Section 147 are not attracted if the notice is issued before expiry of 4 years.

The revenue gladly waited for a period of 5 years for the reasons best known to them to issue notice in the year 2013 after the receipt audit objections u/s 148 in the year 2008.