· Original assessment proceedings were completed in assessee’s case u/s 143(3) of the Income Tax Act. Thereafter, notice u/s 148 was issued to assessee after the expiry of four years from the end of relevant A.Y.
· In the reasons recorded, the AO noted that the assessee has debited interest in its P&L account, regarding which neither the assessee furnished any details, nor the AO had any occasion to verify the same. The AO further referred to the report of Investigation Wing which stated that interest was paid by assessee to various foreign companies during the year.
· The Court observed that there was no reference of any tangible material on the basis of which AO could have reason to believe that income of assessee has escaped assessment.
· The Court further took note of the fact that during the course of original assessment proceedings, specific question with regard to interest was raised, in reply to which, assessee furnished complete details.
· The Court was of the view that the AO did not conduct proper and detailed enquiry with regard to the details provided by assessee. The assessee could not have suggested the AO as to how the enquiry should be conducted.
· Therefore, the Court concluded that as there was no failure on the part of assessee to disclose fully and truly all material facts, the assumption of jurisdiction u/s 147 was bad in law and thus, the notice issued by AO u/s 148 was quashed.
For further reading, refer the attachment.
Further Reading