9911796707
TMI Blog2010 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny was completed. However, during the course of proceedings under Section 263 of the Act for the assessment year 1999-2000, it was noticed that the respondent-assessee had claimed expenditure of '15,36,395/- under the heading "partners training expenses". Out of the said expenditure, 10,46,391/- was claimed in the assessment year 1997-1998. Consequently, on 30th November, 2004, notice under Section 148 of the Act was issued to the respondent-assessee. 3. In proceedings under Section 148 of the Act, the said expenditure was disallowed. Even the appeal filed by the respondent-assessee before the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"] was dismissed. 4. However, the Tribunal allowed the appeal of the respondent-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice 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." 8. From a plain reading of the above proviso, it is apparent that where an assessment under Section 143(3) has been made, as in the present case, no action can be taken under Section 147 of the Act, 1961 after expiry of four years from the end of the relevant Assessment Year unless two conditions are simultaneously fulfilled i.e. firstly, the AO must have reasons to believe the income chargeable to tax has escaped assessment and secondly, the AO must have reasons to believe that such escapement occurred either due to omission or failure on the part of the respondent-assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of the expenses under the heard "partners training expenses". The A.O. has nowhere in the reasons recorded a finding that there was a failure on the part of the assessee to disclose fully and truly all material facts relating to the claim of expenses made under the head "partners training expenses". There is not even a whisper of an allegation in the reasons recorded that the escapement income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The original assessment was completed u/s 143(3) of the Act in pursuance to the return of income filed originally on 31.10.1997. In the return of income, the assessee furnished copy of audit report obtained u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 10,46,391/- as so clearly stated in the P&L account as a separate and distinct item. Therefore, notwith-standing the fact that the first condition to invoke the provisions of Section 147 of the Act that there must be a reason to believe that income had escape assessment is satisfied in the present case, the second condition that there must be failure on the part of the assessee to disclose fully and truly all material fact necessary for assessment has not been satisfied or has been proved to be satisfied. At this stage, we would like to clarify that had it been a case of initiating proceedings u/s. 147 of the Act before the expiry of four years from the end of the relevant assessment year, it was not necessary for the A.O. to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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