The court ruled that re-assessment under the Income Tax Act was invalid as the appellant could not demonstrate undisclosed material facts, thus upholding statutory protections provided to the taxpayer.

JUDGMENT

Navin Chawla, J. (Oral)--This appeal has been heard by way of video conferencing.

2. This appeal has been filed challenging the order dated 31.07.2019 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as the `ITAT') in ITA No. 4938/Del/2012.

3. The dispute originates from the return of income filed by the respondent under Section 139 (1) of the INCOME TAX ACT , 1961 (hereinafter referred to as the `Act') for the assessment year 2004-05 on 11.01.2004. The said return was selected for scrutiny and a notice under Section 143 (2) of the Act was issued by the Assessing Officer to the respondent on 21.11.2005. The same resulted in Assessment Order dated 29.12.2006 making an addition of Rs.96,36,129/- to the taxable income of the respondent after calculating depreciation (Rs.9,08,897/-) and adjusting the brought forward losses of previous assessment year under Section 72 of the Act (Rs.76,80,953/-), the income of the respondent was assessed at Rs.10,46,779/-. The respondent challenged the Assessment Order before the Commissioner of Income Tax (Appeals)-XII. The Commissioner of Income Tax (Appeals)-XII was pleased to allow the appeal vide order dated 30.01.2009 and a relief of Rs.12,94,257/- was granted to the respondent. It is only on 22.03.2011 that a notice under Section 148 of the Act was issued by the Assessing Officer to the respondent claiming that a deduction of franchise fee of Rs.2,40,00,000/- paid by the respondent to M/s Satyam Cineplex Limited was wrongly allowed as it gave an enduring benefit to the respondent and was an expense of capital nature. It was stated that allowing depreciation at the rate of 25% amounting Rs.60,00,000/-, balance amount of Rs.1,80,00,000/- should have been added to the income of the respondent for the Assessment Year 2004-05. The said proceedings resulted in Assessment Order dated 19.12.2011 on the same terms.

4. The Assessment Order was challenged by the respondent before the Commissioner of Income Tax (Appeals)-XII, who vide order dated 18.06.2012 was pleased to allow the appeal holding that as the Assessing Officer has not alleged any failure on the part of the respondent to disclose truly and fully all material facts, the notice under Section 148 of the Act after the expiry of four years from the end of the relevant Assessment Year was not maintainable. It was further held that this was a case of change of opinion by the successor Assessing Officer and in fact the claim of the respondent for the Assessment Year 2003-04 to 2009-10 had also been accepted.

5. The appellant challenged the above order before the learned ITAT, which was pleased to dismiss the appeal vide its Impugned Order dated 31.07.2019 observing that as the notice under Section 148 of the Act was issued more than four years from the end of the Assessment Year and it remained undisputed that the Assessee did file return under Section 139 of the Act; an Assessment Order under Section 143 (3) of the Act was passed on 19.12.2011; reassessment proceedings under Section 147 had been initiated only on 22.03.2011; and the Revenue had failed to show which material facts were not disclosed by the Assessee, no action under Section 147 of the Act could be taken by the appellant.

6. The learned counsel for the appellant submits that in terms of the third proviso to Section 147 of the Act a four-year period provided in the first proviso to the said section would commence only on the final adjudication of the appeal filed by the respondent, which in the facts of the present case was disposed of by the Commissioner of Income Tax (Appeals) [hereinafter referre