IMPORTANT POINT
Reassessment under Section 147 requires proof of failure to disclose material facts during the original assessment, which was not demonstrated in this case.

JUDGEMENT :

Somasekhar Sundaresan J.

1. Rule. With the consent of the parties, taken up for final hearing and disposal.

2. This petition is a challenge to reassessment proceedings initiated in respect of assessment year 2013-14 (“AY-2013-14”). The Petitioner, an individual had filed the relevant tax returns on 27th September, 2013, offering taxable income of Rs.73,08,942/-. The returns were subjected to scrutiny assessment under Section 142(2) of the Income-tax Act, 1961 (“the Act”). The assessment order came to be passed on 11th March, 2016. An addition of Rs.1,14,329/- was made to the returned income. In compliance with the same, the additional tax amount as assessed was paid on 12thApril, 2016.

3. On 31st March, 2021 i.e. seven years after the end of the relevant assessment year, a notice under Section 148 (“Impugned Notice”) was issued to the Petitioner by the Assistant Commissioner of Income-tax, Circle 7 in Pune, Respondent No.2. The sanction for the issuance of the notice under Section 148 had been issued by the Principal Commissioner of Income-tax-4, Pune, Respondent No.3. In response, the Petitioner submitted that he had no change to make to the originally filed returns and therefore, the very same returns were again filed by him on 28th April, 2021. On 30th June, 2021 Respondent No.2 issued a notice under Section 143(2) along with the reasons for reassessment. The stated reason provided for the proposed reassessment was that the returns had not been subjected to scrutiny assessment.

4. On 3rd July, 2021, the Petitioner submitted his written objections to the impugned notice questioning the validity of the reasons for which reassessment had been proposed. The Petitioner asserted that his returns for AY-2013-14 had indeed been subjected to scrutiny assessment. He also submitted that under Section 147 as then applicable, no reassessment would be permissible after the expiry of four years from the end of the relevant assessment year unless the escapement of income was attributable to failure on his part to disclose fully and truly all material facts necessary for assessment at the time of the original assessment. In short, the Petitioner’s primary objection was that since he had filed his return for AY-2013-14 without default, and such return had been subjected to a scrutiny assessment, unless and until there had been a demonstrated failure on his part to disclose fully and truly any material facts, the jurisdictional fact necessary to effect reassessment cannot be said to be in existence.

5. On 21st December, 2021, the Revenue communicated a rebuttal of objections raised by the Petitioner against the issuance of the notice for reassessment. In a nutshell, the case of Respondent No.2 was that income from trading in shares to the tune of Rs.20,69,450/- had escaped assessment, because of which reassessment was being proposed. The basis of such computation was said to be the stock broker of the Petitioner having modified client codes under which transactions had been effected on the stock exchange. However, the transactions in respect of which any client code had been modified; whether it was modified from the Petitioner’s client code to another client code or vice versa; and the manner in which any such modification would lead to a different level of taxable income in the hands of the Petitioner even on a prima facie basis, was not spelt out.

6. On 15th January, 2022, the Petitioner wrote a letter pointing out that the satisfaction and approval of the appropriate authority had not been shared until then, and asked for a copy of the same. On 14th February, 2022 Respondent No.2 passed an order disposing of the objections raised by the Petitioner. This order, according to the Petitioner, does not record the basis on which it can be said that the Petitioner has not disclosed truly and fully all material facts during the original assessment. In a nutshell, the order asserted that the power to effect the reassessment beyond the period