Section 147 of the Income Tax Act, 1961- Reassessment - Reopening of assessment invalid as condition precedent for re-opening the concluded assessment of the assessee is absent.

Facts: After several rounds of communication, AO furnished the reasons for re-opening of assessment to assessee . As per the reasons furnished, AO was of the view that by claiming gross receipts as exempt and claiming the cost of borrowing etc. from its business income, assessee in fact claimed double deduction which is not permissible in law. It is also stated that assessee had not furnished details of expenses incurred to earn interest on approved foreign exchange loans. However, based on the data from the assessment year 1998-99, the cost for earning interest on such lending comes to more than 80%. Thus, excess exemption was allowed by more than Rs. 280 crores. This resulted in escapement of income by allowing excess exemption under section 10(15)(iv)(c) and (f). Being aggrieved, assessee has preferred the present writ petition seeking the relief.

Held, that the present case is one were the impugned notice issued under section 148 of the Act is clearly beyond four years from the end of the assessment year in question. Therefore, what is relevant to note is that AO must have or form reason to believe that any income of the petitioner chargeable to tax has escaped assessment by reason of the failure on the part of the petitioner to disclose fully and truly all material facts. After discussing GKN Driveshafts (India) Limited, this Court observed that the assessee should have filed its return pursuant to the impugned notice and should have sought for the reasons for issuing such notice. This Court further observed that it would have rejected the writ petition on this ground but the reasons having been disclosed by the assessing officer prima facie showed that there was nothing in the reasons to indicate failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. On that ground this Court declined to dismiss the writ petition in limine. No reasonable view can be taken that there was failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year 1990-91. If that be so then AO could not have formed any reason to believe that any income of the petitioner chargeable to tax for the said assessment year had escaped assessment. Thus the condition precedent for re-opening the concluded assessment of the assessee is absent in the present case. In such circumstances, issuance of the impugned notice under section 148 is clearly without jurisdiction and is therefore illegal and invalid. Consequently, the impugned notice issued under section 148 as well as the subsequent notices issued under sections 143(2) and 142(1) are hereby set aside and quashed. - STATE BANK OF INDIA V/s VINEET AGRAWAL - [2020] 29 ITCD Online 006 (BOM)