Failure To Disclose All Material Facts Is Essential To Issue Reassessment Notice: Bombay High Court

The Bombay High Court at Goa has held that failure to disclose fully and truly all material facts is an essential jurisdictional parameter that must be fulfilled before any notice can be issued for reopening the assessment proceedings after the expiration of four years from the end of the relevant assessment year.

The division bench of Justice M.S. Sonak and Justice Bharat P. Deshpande has observed that in the absence of any allegation or a plain statement about compliance with the jurisdictional parameter, the reassessment notice cannot be ordinarily sustained.

The petitioner has challenged the reopening of the assessment for the assessment year 2012–13 on the ground that there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for that assessment year. Therefore, no notice for reopening the assessment could have been issued after the expiration of four years from the end of the relevant assessment year.

The department contended that even if some latitude is extended to the Revenue by overlooking the absence of allegation about failure to disclose material facts, the record bears out that the petitioner made complete disclosures in the present case. Consequently, even on the basis of facts, the Revenue failed to establish any failure to disclose truly and fully all material facts necessary for its assessment for AY 2012–13.

The petitioner contended that it did not fail to disclose fully and truly all material facts necessary for its assessment of the relevant AY 2012–13. The notice, therefore, cannot be sustained.

The court held that there is a well-known difference between a wrong claim by an assessee after disclosing the true and material facts and a wrong claim made by the assessee by withholding the material facts fully and truly. Only in the latter case would the assessing officer be entitled to reopen the assessment after four years.

Case Title: Chowgule & Company (P) Ltd. Versus JCIT

Citation: Writ Petitioner 1089 Of 2019

Date: 06.12.2022

Counsel For Petitioner: Senior Advocate Firoze Andhyarujina, Manek Adhjyarujina, Shreya Arur, S. Kenny

Counsel For Respondent: Standing Counsel Amira Razaq

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