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2020 (6) TMI 301 - HC - Income TaxReopening of assessment u/s 147 - merger proceedings - whether assessee was not entitled to adjust the loss of the transferor company as the said company was not engaged in the “manufacturing activity” within the meaning of Section 72A(1)(a)? - HELD THAT:- Whether the petitioner was entitled to adjust the loss of the brought forward from the books of accounts of the transferor company was subject matter of discussion before the assessment orders were passed for the respective Assessment Years. Reopening of the assessment to deny the adjustments made under is therefore without jurisdiction. Therefore, the proviso to Section 147 puts an embargo on the respondent from proceeding further as 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 sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. If in the course of such proceedings the respondent comes to a conclusion that there were other grounds on which assessment can be reopened, the respondent can assess or reassess such income in the light of Explanation 3 to Section 147 of the Income Tax Act, 1961. In the light of the above discussion, direct the petitioner to participate in the proceedings before the respondent. The respondent is however precluded from disturbing the adjustments made by the petitioner and allowed in their respective assessment orders under Section 72A(1)(a). The respondent may however look for such other aspects which may come within the purview of Explanation 3 to Section 147 of the Income Tax Act, 1961, for them to demand while passing orders.
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