Reopening of assessment under the Income Tax Act requires an allegation of failure to disclose material facts; without this, jurisdiction is lacking.

Judgment :

(M. S. Sonak, J.) :

1. Heard learned counsel for the parties.

2. Rule. The rule is made returnable immediately at the request and with the consent of the learned counsel for the parties.

3. The petitioner challenges the impugned notice dated 25 March 2021 under Section 148 of the Income Tax Act, 1961 and the impugned order dated 31 January 2022, rejecting the petitioner’s objection to reopening of the assessment made by the first respondent for the assessment year 2014-15.

4. Admittedly, the impugned notice dated 25 March 2021 was issued more than four years after the end of the relevant assessment year. Therefore, in terms of the proviso to Section 147 of the Income Tax Act, the Assessing Officer could have reopened the assessment only upon recording satisfaction that the petitioner failed to fully and truly disclose all material facts necessary for the assessment.

5. Upon receipt of the impugned notice dated 25 March 2021, the petitioner sought and was furnished the reasons for reopening via communication dated 11 January 2022. The reasons are contained in the annexure to this communication and are transcribed below for the convenience of reference: -

ANNEXURE

1. The assessee company is engaged in the business of publishing and trading of books. Oxford University Press is a department of the University of Oxford and has a branch PE (Oxford University Press India) with several other offices in India.

2. In this case the assessee has filed return of income for AY 2014-15 on 16.07.2015 declaring total income of Rs. 31,39,16,580/- in the status of a domestic company i.e. resident' company, taxable @ 30% and applicable surcharge and cess. The case was selected for scrutiny and the assessment was completed on 30.12.2016 with assessed total income of Rs. 32,77,68,610/- in the status of a domestic company i.e. 'resident' company, taxable @ 30% and applicable surcharge and cess.

3. In the Income tax return filed by the assessee for AY 2014-15, the assessee has mentioned the status as Domestic Company and the income was assessed to tax at 30% i.e., domestic company tax rate. However, in the scrutiny proceedings of AY 2016-17, based on the Tax residency certificate submitted, the assessee was assesssed as Non-resident and the income was taxed at 40% i.e., foreign company rate.It is also to be noted that the assessee was assessed as 'non-resident' in the Order passed u/s. 144C(1) dated 31.12.2019 for AY 2016-17.

4. In view of the above facts and as per the TRC, the status of the assessee is a 'non- resident' and it has to be assessed as such. The assessee company should have been taxed at the rate applicable to foreign company. The assessment of the A.Y. 2014-15 was completed in the status of 'resident', which attracts the tax of Rs. 11,14,08,550/- @ 30% + applicable surcharge and cess, as applicable in case of a 'resident' assessee. However, since the assessee is a non resident entity it has to be taxed @ 40% +surcharge and education cess. Hence, the income has not been correctly taxed and therefore the short levy of tax of Rs. 3,54,48,175/- should be charged to the assessee.

5. In view of the above I have reasons to believe that the assessed income of Rs. 32,77,68,610/- has not been taxed at the correct rate applicable to the non resident companies and it has escaped assessment to the extent of short levy of tax of Rs. 3,54,48,175/- for the A. Y. 2014-15 within the meaning of Explanation 2(c)(ii) of Sec. 147 of the Income Tax Act, 1961. Hence, it is a fit case for issuance of notice u/s 148 of the I.T Act, 1961 for the A. Y. 2014-15. The assessment being sought to be reopened falls within the period of six years from the end of the assessment year. Therefore the administrative approval of the CIT is requested to be granted as per section 151(1) of the I. T. Act.”

6. On perusing the reasons, we find no allegation regarding any failure on the petitioner’s part to fully and truly disclose any material facts necessary for the assessment. Wi