TMI Blog2008 (2) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The brief chronological facts of the case are as under :- (a) On 30.10.2001 the petitioner filed a return in respect of the assessment year 2001-2002 which indicated a loss of Rs.133,91,49,737/-. The said return was accompanied by a copy of the petitioner's audited accounts for the year ended 31.3.2001. In the computation annexed to the return, the petitioner had disclosed that a company named Tata Cellular Limited had amalgamated into the petitioner w.e.f.1 st January 2001. More details of the amalgamation were given in the directors' report annexed to the audited accounts. In the balance-sheet and in Schedule 2 thereof, the petitioner had disclosed that a sum of Rs.9984.15 lakhs was credited to the "Amalgamation Reserve" account under the head "Reserves Surplus". In note 4(a) of Schedule 19 to the audited accounts, the petitioner had given full details as to how the said sum of Rs.9984.15 lakhs was arrived at. It explained that the assets and liabilities of Tata Cellular Limited had been accounted for in the accounts as per the "Pooling of Interest method" prescribed in the Accounting Standard on Accounting for Amalgamations (AS-14) as issued by the institute of Charte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its assets more by Rs.9984.15 lakhs, whereas the net consideration discharged or paid by it is lesser by that amount. (iii) In simple words the assessee has earned discount of Rs.9984.15 lakhs on its acquisition of Total Assets and Liabilities of Tata Cellular Limited. Since this discount earned cannot be allocated to a particular asset, it cannot be adjusted against cost of assets. None the less, this discount is income in the hands of the Company and same should be brought to tax. Since it is evident that this discount is earned in the course of acquisition of a business asset, hence the same should be treated as business income. Petitioner was called upon to make his submissions on these issues, along with detailed working as to how this amount has been worked out." (e) In reply to the show cause notice the petitioner addressed a letter dated 5.3.2004 in which he dealt with the contentions raised by respondent no.1. In paragraph-4 of the said letter, the petitioner termed the contention of respondent no.1 of treating the reserve arising on amalgamation as business income as "erroneous and absurd" and went on to explain in detail the process by which shares are allotted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded reasons the petitioner addressed a letter dated 13.12.2007 in which they made the following points :- (1) That the petitioner had made a full and true disclosure of the material facts necessary for the assessment ; (2) That Respondent No.1 had raised specific queries on the issue and that elaborate submissions had been made by the petitioner and it was only after considering the facts and the details that the assessment order under section 143(3) of the Act was passed ; (3) It was emphasized that the present proceedings were based on a mere change of opinion ; (4)\That the petitioner relied on a number of judicial precedents including that of the Hon'ble Supreme Court in CIT vs. Formaer France [2003] 264 ITR 566 and that of this Hon'ble Court in IPCA Laboratories vs. DCIT (No.2) [2001] 251 ITR 416 to emphasise that the assessment could not be reopened where there was no failure to make a full and true disclosure of the material facts and on the basis of a mere change of opinion. (5) Without prejudice, the petitioner also dealt with the merits of the matter in detail to explain that an amalgamation reserve could never have the character of "income". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the petitioner of the kind envisaged by the proviso as the petitioner had disclosed that the sum of Rs.99185 had been credited to the amalgamation reserve in their returns and had also replied to the several queries relating to this aspect of the matter as detailed hereinabove. 4. On behalf of the respondents an affidavit-in-reply dated 21.5.2008 came to be filed. As regards the aforesaid point raised, it was contended that though the assessee was confronted on this issue, no official opinion has been formed in the assessment order by the Assessing Officer and therefore, it was contended that this was not a case of change of opinion. It was contended that since the assessee had failed to disclose the income accruing on amalgamation, provisions of section 147 were applicable. 5. In the affidavit-in-rejoinder dated 7.2.2008 it was contended on behalf of the petitioners that the stand taken by the respondents was casual and was taken without appreciating the statutory precondition for validly assuming jurisdiction under section 147, which was that there must be a "failure to make a full and true disclosure of the material facts". 6. In the circumstances of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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