Reassessment proceedings cannot be initiated if the assessee has made full and true disclosure

The Income Tax Appellate Tribunal (ITAT) in the matter of Ranjana Agarwal Vs CIT(A) has held that notice u/s 148 cannot be issued beyond the period of four years if the assesse has made true and full disclosure of all material facts in the original assessment.

The Appellant, Ranjana Agarwal has filed a return of income for A.Y. 2011-12 on 24.09.2011 declaring a total income of Rs. 1,28,000/-. The assessing officer after completion of the assessment passed the order u/s 147/143(3) by making the addition of Rs. 39,76,192/- as undisclosed income of the assesse. The assesse had filed an appeal before the CIT (A) challenging the addition as well as the validity of the reassessment proceedings. The CIT (A) after considering the remand report of the AO upheld the validity of assessment proceedings and upheld the addition made by AO. Aggrieved with the order passed by CIT (A), the assesse appealed before the ITAT.

Before ITAT the assesse submitted that notice u/s 148 for the assessment year was issued on 29.03.2018 which was beyond a period of 4 years from the end of the relevant assessment year. The assesse submitted that when the original assessment was completed u/s 143(3) and reassessment proceedings had been initiated after a period of 4 years from the end of the relevant assessment year and there is no allegation of any failure on the part of assesse to disclose fully and truly all material facts necessary for the completion of the assessment, such reassessment proceedings initiated were void ab initio in view of the first proviso to section 147.

The ITAT in its order held that the AO had initiated reassessment proceedings by recording reasons and the perusal of the reasons clearly shows that there is absolutely no allegation by the AO of any failure on part of assesse to disclose fully and truly all material facts necessary for the completion of the assessment. Further, the ITAT relied upon the judgments made by the Hon’ble Delhi High Court in the case of JSRS Udyog Ltd. Vs. ITO reported in 313 ITR 321 and CIT Vs. Viniyas Finance & Investment (P) Ltd. Reported in 357 ITR 646, holds that the reassessment proceedings initiated by the AO and upheld by CIT (A) are not in accordance with the law.