Friday, June 29, 2012

S. 147: Retrospective amendment does not mean failure to disclose material facts

 
CIT vs. M/s K. Mohan & Co. (Exports) (Bombay High Court)

S. 147: Retrospective amendment does not mean failure to disclose material facts

After the expiry of four years from the end of the assessment year, the AO reopened the assessment u/s 147 by relying on the retrospective amendment to s. 80HHC by the Taxation Laws (Amendment) Act, 2005 w.e.f. 1.4.1998. The CIT (A) and Tribunal (included in file) struck down the reopening. On appeal by the department, HELD dismissing the appeal:

The assessment was sought to be reopened on account of retrospective amendment to s. 80HHC introduced by the Taxation Laws Amendment Act, 2005 with effect from 1st April 1998. If the legislature amends the provisions of the Act with retrospective effect, it cannot be said that there was failure on the part of the assessee to disclose fully and truly all material facts relevant for the purpose of assessment.

See also Sadbhav Engineering vs. DCIT (Guj) & CIT vs. Baer Shoes (Mad)

Related Judgements
Titanor Components Limited vs. ACIT (Bombay High Court At Goa) 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…
CIT vs. Baer Shoes (Madras High Court) The assessee had claimed deduction u/s 80HHC after a full disclosure of the material facts. As four years had elapsed from the end of the assessment year, the assessment could not be reopened in the absence of failure to disclose the material facts. The judgment of the Supreme Court…
Sadbhav Engineering vs. DCIT (Gujarat High Court) 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…

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