What is section 143(3) of the Income Tax Act?
Section 143(3) under the Income Tax Act 1961 refers to the Income Tax Notice pertaining to Scrutiny Assessment. Under this section, the Assessee receives notice when the income tax department has doubts regarding the authenticity of income or has some information with respect to concealment of income. Read in detail the conditions for Reopening of assessment beyond a period of 4 years
The conditions required for Reopening of assessment beyond a period of 4 years under Section 143(3) of the Act:
The Best Cybercity (India) Pvt. Ltd. Vs Income Tax Officer, Ward 4(3) and the Delhi High Court case summarizes the prerequisites to re-open an assessment that is beyond 4 years specifically case of assessment done under section 143(3) of the Income Tax Act, 1961.
The law requirements in cases where the case’s primary assessment has been done under Section 143(3) and re-opening of this assessment of the case is more than four years has been settled well in numerous cases, and this even includes the CIT v. Kelvinator of India Ltd. (supra). The requirements can be summarized as under:
(i) There has to be some tangible material which directs an AO to have some reasons to believe that the income which is liable to tax for the concerned Assessment Year has evaded assessment.
(ii) The reasoning of the Assessment Officer should not be built on just a difference of opinion. In order to resolve an oversight or overcome an accidental error/mistake in the primary assessment order, the AO cannot invoke the Sections 147/148 of the Income Tax Act.
(iii) When the original assessment that has to be reopened after more than four years from the end of the appropriate Assessment Year, pertains to Section 143(3) of the Income Tax Act, then as per the first provision of Section 147 of the Income Tax Ac, it has to be further shown that the income evaded was either due to the failure of the of the Assessee to file his return under Section 139, or failure to disclose all complete material facts that are required for the assessment, or in response to the notice u/s 142(1) or 148 of the Income Tax Act.
(iv) The re-opening of the assessment must have reasons which themselves include all the above-mentioned elements. This means that the facts of tangible material existing and recording of the AO’s satisfaction regarding the Assessee’s failure to truly and fully disclose all the material facts which were required for the assessment should find a place in the recording of reasons in order to re-open the assessment. Any deficiency in this aspect cannot be covered up by way of filing a counter affidavit in the Court as a response to the petition that questions the assessment’s reopening.