The Bombay High Court in the case Konark Life Spaces Versus Assistant Commissioner of Income -Tax observed and has quashed the reassessment proceedings as the issue of large loans and advances which was not only being raised during the scrutiny assessment but also being responded to the assessee.
The division bench comprising of Justice Dhiraj Singh Thakur and Justice Kamal Khata in the case observed that nothing new happened between the date of the order of assessment, which seek to be reopened, and between the date of the formation of the opinion. On the other hand, this is neither new information nor reference made to any new material on record.
In the present case, the petitioner/assessee challenges the notice under Section 148 of the Income Tax Act, 1961, which sought for reopening the assessment. It has been stated that as per AO, the reasons for reopening were in relation to an advance payment which is made to M/s Nancy Builders and Developers Pvt. Ltd, as the same remains to be unexplained. As a result of which, it has been claimed that the petitioner failed to disclose fully and truthfully all material facts required for the reassessment.
Before the court, it has been contended by the assessee that there was no omission on the part of the assessee for disclosing truly and fully any material fact and that all material facts had to be disclosed of before the AO regarding the said amount, which is to be considered by AO. Therefore, the court stated that the initiation of reassessment proceedings was nothing but it only being a change of opinion, and there being no omission on the part of petitioner for disclosing the material facts
It has also been noted by the court that the assessment is being reopened for four years after the end of the relevant assessment year, i.e., 2015-2016. Thus, the jurisdictional requirement being there was a failure on the part of the assessee to fully and to truly disclose all material facts which are necessary for assessment which had to be established by the assessing officer.
The court while considering the facts of the case observed and has ruled that if a notice issued under Section 148 of the Act is issued without the jurisdictional foundation as stated under Section 147 as it is being available to the Assessing Officer, thus, the notice issued and the subsequent proceedings will be void and is subject to dismissal in the exercise of the writ jurisdiction of court.
It has been stated by the court that it being a case of absence of material and, hence, the absence of jurisdiction for the Assessing Officer to initiate the proceedings under Section 147 and Section 148 of the Income Tax Act, 1961.