M/s. Mangalam Publications, Kottayam vs. Commissioner of Income Tax, Kottayam
Background
M/s. Mangalam Publications, a partnership firm engaged in publishing newspapers and periodicals, was regularly assessed to income tax. For the assessment years 1990-91, 1991-92, and 1992-93, the firm’s books of account had been seized by the tax department during a search in 1985, which led to difficulties in producing regular books for subsequent years. Nevertheless, the firm filed returns with primary accounts and statements of income.
The Assessing Officer later initiated reassessment proceedings under Section 147 of the Income Tax Act, issuing notices under Section 148, citing discrepancies between financial statements submitted to banks and those provided to the tax department. The officer alleged that Mangalam Publications had failed to disclose fully and truly all material facts necessary for assessment.
Tribunal and High Court Proceedings
The Income Tax Appellate Tribunal (ITAT) ruled in favor of Mangalam Publications, holding that the reassessment was merely a “change of opinion” and not based on any new material. However, the Kerala High Court reversed this, siding with the revenue and holding that the assessee had not made a full and true disclosure, thus justifying the reopening of assessment.
Supreme Court’s Analysis and Findings
The Supreme Court examined whether the reopening of a concluded assessment under Section 147 was valid. The Court reiterated that an assessee’s obligation is limited to making a “full and true” disclosure of all primary facts. Once this is done, the burden shifts to the Assessing Officer to seek clarifications or call for curing any defects. If the officer fails to do so, the return cannot be treated as defective later.
The Court emphasized that reassessment cannot be justified on a mere change of opinion or reinterpretation of facts already available at the time of original assessment.
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