The Calcutta High Court has held that Assessing officer should comply with the condition precedent for reopening assessments after limitation.
The petitioner, Peerless Hospitex Hospital and Research Center Limited engaged in the business of running a multi-speciality hospital. The petitioner relates to a payment of Rs. 51,76,992/- as ‘referral to doctors’ which was claimed by it as business expense in its return of income filed for the assessment year 2011-12 and the same in course of regular assessment proceeding the Assessing Officer had allowed.
The petitioner submitted that reopening of the assessment in question has been made after expiry of four years from the end of relevant assessment year. The impugned action of initiation of proceeding of reopening of assessment in question under Section 147 of the Act is merely on change of opinion and neither there is any new material which came to the notice or knowledge of the Assessing Office.
The High Court observed that at the time of submission of the original returns, as per the requirements of the law, the assessee submitted certificates from the chartered accountant in the prescribed forms claiming such exemptions. Thus, the primary facts were before the AO when he made the assessments under Sub-section (3) of Section 143 and it was not open to him to invoke the provisions of Section 147 of the said Act to reopen the assessments because he might have omitted to notice certain facts by oversight. For change of opinion, the provisions of Section 147 of the said Act cannot be put to service.
The single bench presided by Mr. Justice Muhammad. Nizamuddin has held that “I am inclined to hold that since condition precedent for invoking Section 147 of the Income Tax Act, 1961, for reopening of assessments after expiry of four years from the end of relevant assessment years has not been fulfilled and the impugned reopening of assessment is on mere change of opinion, the impugned notices dated 27th July, 2018 under Section 148 of the Income Tax Act, 1961 in both the Writ Petitions relating to assessment year 2010-11 and 2011-12 are held as bad and not sustainable in law and the said impugned notices under Section 148 of the Income Tax Act, 1961 and all subsequent proceedings on the basis of the aforesaid impugned notices under Section 148 of the Income Tax Act, 1961, are quashed”.
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