TMI Blog2010 (6) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12th Oct., 2001 in which he had shown loss of ₹ 1,06,430. Assessment was framed on 24th Feb., 2003 under s. 143(3). Subsequently, the AO received information from Directorate of IT (Inv.), New Delhi that the assessee has received accommodation entries from certain persons during the year. Therefore, the assessment was reopened and notice under s. 148 was issued on 13th March, 2008. AO framed assessment under s. 147 r/w s. 143(3) wherein he concluded that the amount of ₹ 4,80,000 received from M/s Natraj Communications (P) Ltd. was unexplained cash credit under s. 68 of the IT Act. Before the CIT(A), the assessee challenged the validity of reopening in view of proviso to s. 147, as well as merit of addition. By the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f material facts fully and truly by the assessee and the reopening was merely on the basis of subsequent information from the Investigation Wing. 1. The first proviso to s. 147 reads as under : Provided that where an assessment under sub-s. (3) of s. 143 or this section has been made for the 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 failure on the part of the assessee to make a return under s. 139 or in response to a notice issued under sub-s. (1) of s. 142 or s. 148 or to disclose fully and truly all material facts necessary for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t High Court in the case of Sheth Brothers vs. Jt. CIT (2001) 169 CTR (Guj) 519: (2001) 251 ITR 270(Guj) has observed that where the assessment was sought to be reopened after a period of four years and there was admittedly no omission or failure on the part of the petitioner, the AO, i.e., the respondent, could not assume jurisdiction under s. 147. Following was the precise observation of Hon'ble High Court : As the assessment was sought to be reopened after a period of four years and there was admittedly no omission or failure on the part of the petitioner, the AO, i.e., the respondent, could not assume jurisdiction under s. 147. 'The Act provides for the machinery in Chapter XIV under ss. 147 to 153 for the assessment of esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04) 188 CTR (Bom) 380observed that concluded assessment can be reopened beyond a period of four years only if there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. It was further observed that having furnished all material facts, even if the assessee erroneously claims higher depreciation, it will not be a case of failure to disclose fully and truly all facts. Also if the legal inference drawn from the material facts is erroneous, it cannot be said that there is failure on the part of the assessee. 8. The Calcutta High Court in the case of Jay Shree Tea Industries Ltd. vs. Dy. CIT (2001) 165 CTR (Cal) 193: (2000) 245 ITR 567(Cal) observed that the notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i materia and, therefore, the principles enunciated by Hon'ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das 1976 CTR (SC) 220: (1976) 103 ITR 437(SC) may be said to be valid in respect of the law on the statute book w.e.f. 1st April, 1989. These principles are summarized as under : (i) The duty on the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. (ii) The duty of the assessee did not in any case extend beyond making a true and full disclosure of the primary facts. Once he has done that his duty ends. (iii) In order to be able to initiate such proceedings under s. 147(a), the ITO should have reason to believe that income chargeable to tax has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Wel Intertrade (P) Ltd. Anr. vs. CIT (2008) 13 DTR (Del) 204: (2009) 308 ITR 22(Del) held that if the assessee has disclosed truly and fully all material facts necessary for the purpose of assessment, an action under s. 147 cannot be taken after expiry of four years from the end of the relevant assessment year on the basis of mere change of opinion of the AO that a large sum ought to have been disallowed in original assessment. 12. In view of the above, agreeing with the learned Authorised Representative Shri Ved Jain that on the facts of the case the legal issue is squarely covered by the proviso to s. 147, we are inclined to reverse the orders of the lower authorities and allow the appeal in favour of the assessee. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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