TMI Blog2006 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... otices issued under section 148 of the Income-tax Act, 1961 - - - - - Dated:- 28-2-2006 - Judge(s) : DR. S. RADHAKRISHNAN., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by J.P. Devadhar J.- Heard learned counsel for both the sides. Rule. Rule is made returnable forthwith. By consent of parties, both these petitions are taken up for final hearing. In these two writ petitions, the petitioners have challenged the notices issued under section 148 of the Income-tax Act, 1961 as also the order passed by the Assessing Officer rejecting the objections raised by the petitioners for reopening the assessments for the assessment year 1998-99 and the assessment year 1999-2000. Since the facts in both the writ petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment is based on examination of the records available with the Department and there is no allegation of failure on the part of the assessee to disclose fully and truly all material facts. Therefore, the reopening of the assessment beyond four years without there being any failure on the part of the assessee cannot be sustained. Shri Inamdar further submitted that in the present case the dispute pertains to the market value adopted by the petitioner in respect of Hexa-peptide manufactured by them. Prior to its manufacture in one of its units, the petitioner used to import Hexapeptide from other countries. While transferring the indigenously manufactured Hexapeptide from one unit to another unit since the assessment year 1994-1995, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 130-150 per gram. Thus in the assessment year 1999-2000, the issue of market value was again raised and after considering the submission, the price was reduced. In these circumstances it is not open to the Assessing Officer once again to agitate the issue by initiating proceedings for reopening the assessment and that too when there is no failure on the part of the assessee to disclose the basis of fixing the transfer price. Relying upon the judgment of this court in the case of Hindustan Lever Ltd. v. R.B. Wadkar, Asst. CIT (No. 1) [2004] 268 ITR 332 (Bom) Shri Inamdar submitted that it is not open to the Assessing Officer to supplement the reasons by filing an affidavit. He further submitted in the present case the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that none of the requisite conditions have been fulfilled for reopening the assessment under section 148 of the Income-tax Act, 1961 and therefore, the impugned notices issued are liable to be quashed and set aside. Shri Chopra, learned counsel for the respondents, on the other hand supported the orders passed by the authorities below. He submitted that from the reasons recorded for reopening the assessment as elaborated in the order rejecting the objection it can be seen that the transfer price shown by the petitioner in respect of the goods manufactured by them was not just and proper. He submitted that the reasons recorded for reopening the assessment can be supplemented by an order while dealing with the objections raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to disclose fully and truly all material facts. In the present case, from the reasons recorded for the reopening the assessment it is seen that the reopening is solely based on the materials already on record and it is not the case of the Revenue that there was any failure on the part of the assessee to disclose fully and truly all material facts. If there is no failure on the part of the assessee to disclose fully and truly all material facts, then the reopening of the assessment is liable to be quashed and set aside on that ground alone. While rejecting the objections raised by the petitioner, the Assessing Officer has recorded that on sale of the final product, the assessee had incurred loss. From the annexures to the petition, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and truly all material facts. The Revenue cannot invoke Explanation 2 to section 147 of the Income-tax Act in the present case because the assessment sought to be reopened is beyond four years from the end of the relevant assessment year and there is no failure on the part of the assessee to disclose fully and truly all material facts. In other words, where the assessment is sought to be reopened beyond four years from the end of the relevant assessment year, then, unless it is established that there was failure on the part of the assessee to disclose fully and truly all material facts the question of invoking Explanation 2 to section 147 does not arise at all. For all the aforesaid reasons we are of the opinion that in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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