Reassessment

If there is no failure to disclose fully and truly all material facts necessary for the purpose of the assessment, then the reopening of the assessment beyond four years from the end of the relevant assessment year is unsustainable, as held by MumHC in Nihilent Technologies Private Limited v Dy CIT and Others — In favour of: The assessee; Writ Petition No 10104 of 2010.

During the course of the assessment proceedings for AY 2003–2004, all material facts relating to the transfer of shares of Hatch Investments by Nedcor Bank Limited to Dimension, as well as the fact that the effective shareholding of Nedcor Bank Limited in the assessee Company had been reduced from 76.25% to 38.125% as at 31 March 2003, was disclosed to the AO.

Thus, the fact that the effective shareholding of Nedcor Bank Limited in the assessee company had gone down below 51% was specifically brought to the notice of the AO by the assessee. In these circumstances, it cannot be said that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. If there is no failure to disclose fully and truly all material facts necessary for the purpose of assessment, then, as per the proviso to s 147 of the Act, the reopening of the assessment beyond four years from the end of the relevant assessment year cannot be sustained.

Decided on: 18 July 2011.