TMI Blog2014 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... income from the assessment of the year - The finding in that context is that that income does not belong to the relevant year - the Tribunal in its order was concerned with an appeal from orders passed in block Assessment and held that the ambit/ scope for assessment for the block period under Chapter XIVB is only to assess the undisclosed income for the block period and not for the total income or loss suffered in the previous year which is subject matter of regular assessment. The reasons in support of the notice do not indicate even remotely that there has been any failure on the part of the Petitioner to disclose truly and fully all material facts necessary for the assessment - all the other conditions precedent to issue of reopening notice u/s 147/148 of the Act have to be satisfied - during the assessment proceeding u/s 143(3) of the Act, the AO called for details relating to the assets available and the claim for depreciation – assessee responded to the same and was subject matter of consideration by the AO inasmuch as he disallowed the claim of 100% depreciation in respect of three items i.e. Semi Conductor, Comber Machine restricting it to 25% - the AO had applied his m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of excess rate of depreciation claimed by the Petitioner. 4 Being aggrieved by the order dated 30th September, 1997, the Petitioner preferred an appeal to the Income Tax Appellate Tribunal (Tribunal). On 25th October 2002, the Tribunal allowed the Petitioner's appeal for the block period 1st April,1986 to 1st August, 1996 (Assessment Year 1987-88 to 1997-98) and deleted the entire addition made on disallowance of depreciation by the Assessing Officer. 5 Consequent to the above order dated 25th October, 2002, the Assessing Officer issued impugned notice dated 26th March, 2003 seeking to reopen the assessment for the Assessment Year 1993-94. 6 In support of the impugned notice dated 26th March, 2003, the Assessing Officer furnished to the Petitioner, the following recorded reasons : M/s. SHREE KRISHNA PETRO YARNS LTD. ASSESSMENT YEAR 1993-94 Date: 26.03.03. A search seizure action u/s 132 of the I. T. Act, 1961 was conducted on M/s. Shree Krishna Polyster Limited 01.08.1996. The assessee had filed nil return for the block period in response to notice u/s. 158BC. The block assessment in this case was completed on 30.09.1997 estimating the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer by order rejected the Petitioner's objections. The order dated 6th December 2004 held that the impugned notice dated 26th March 2006 has been correctly issued in view of the finding recorded in the order of the Tribunal dated 25th October 2002. 9 Mr. Pardiwala, learned Senior Counsel appearing for the Petitioner in support of the Petition submits as under: (i) The impugned notice dated 26th March 2003 is time barred as it seeks to reopen the assessment for the Assessment Year 1993-94 under Sections 147 and 148 of the Act i.e. almost nine years from the end of the relevant assessment year. The impugned notice is in the face of and in defiance of the period of limitation provided in Section 149 of the Act; (ii) The revenue seeks to extend the period of limitation provided under Section 149 of the Act on a perverse reading of the order dated 25th October 2002 of the Tribunal in Block proceedings that it renders a finding which is being given effect to by the impugned notice dated 26th March 2003. It is submitted that there is no such finding in order dated 25th October 2002 of the Tribunal which extend the period of limitation by virtue of Section 150 of the Act; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for assessment, for that assessment year. (emphasis supplied) Issue of notice where income has escaped assessment. Section 148:- Before making the assessment, reassessment or recomputation under section 147 , the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period,[* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued in consequence of or to give effect to a finding or directions contained in an order passed by an Appellate Authority. The aforesaid provisions only extend the period of limitation but otherwise there is no change in the conditions precedent to be satisfied under the Act to issue a reopening notice under Sections 147 and 148 of the Act. Thus, there is no change otherwise in the substantive conditions to issue a reopening notice under Section 148 of the Act. 14 In this case, the impugned notice is issued after a period of almost nine years from the end of the relevant Assessment Years i.e. 1993-94. The reasons in support of the impugned notice as reproduced herein above, is the finding in the order of the Tribunal dated 25th October 2002. We find that the order of the Tribunal dated 25th October 2002 was dealing with appeal for block assessment i.e. 1st April 1986 to 1st August 1996. The Tribunal by its order dated 25th October 2002 while allowing the appeal of the Petitioner followed the decision of this Court in CIT v/s. Dr. M. K. E. Memon - to hold that the scope of the block assessment is only to assess the undisclosed income for the block period and not the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idar B. Deo 52 ITR 335 has explained the meaning of 'finding' thus:- . . . .. A 'finding', therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The aforesaid meaning to the word 'finding' was rendered in the following contextual facts:- Income Tax Office had issued a re-opening notice, seeking to reopen assessment for the Assessment Year 1949-50. Consequently, the Assessment Order was also passed. In appeal, the Appellate Assistant Commissioner held that addition of interest made for the Assessment Year 1949-50 was incorrect and if at all it had to be included in the Assessment Year 1948-49. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer is free to look into and consider these disallowances under section 148 of the Income-tax Act, in the relevant assessment years in terms of section 150(1) read with Explanation 2 of section 153 in respect of deletion of both amounts made in this order. The Assessing Officer relied upon the aforesaid observations to support the notices issued on the ground that there were finding/ directions given by the CIT(A). This Court followed the Apex Court's decision in Murlidhar Bhagwan Das (supra) to hold that there was no finding given in the CIT(A) order. So far as directions were concerned, this Court followed the decision in Rajinder Nath v/s. CIT 120 ITR 14 to hold that the above observations were not directions to issue a notice but merely allowed the Assessing Officer to take a look into the issue and decide. This is different from directions. In view of the above, this Court held that the notice for reopening are beyond the period provided under Section 149 of the Act and Section 150 of the Act would have no application as the CIT(A) had not given any finding and/or directions to reopen the assessment. In any case, in the present case the revenue has pegged its ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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