TMI Blog2006 (5) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds in this appeal. Ground Nos. 1 and 4 are general in nature. As far as ground No. 3 is concerned, the ld. Departmental Representative was fair enough to admit that this ground does not arise from the order of the CIT(Appeals). As far as ground No. 2 is concerned, the only issue for our consideration is whether the CIT(Appeals) was justified in holding that there was no failure or omission on the part of the assessee to disclose all the material facts and hence reopening of the assessment after the period of four years cannot be held to be valid. 3. The facts in brief can be stated as follows : The assessee is a banking company and original assessment for the assessment year 1993-94 was completed under section 143(3) of the Act on 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the CIT(Appeals). On the other hand, the ld. Departmental Representative vehemently submitted that the CIT(Appeals) was not justified in holding that there was no omission or failure on the part of the assessee. He further submitted that by virtue of the Explanation 1 to section 147, merely because the assessee has produced the documents and books of account, that cannot be the reason for stating that there was no failure or omission on the part of the assessee to disclose all material facts. He, therefore, submitted that the CIT(Appeals) was not at all justified in holding that the Assessing Officer was not right in initiating the re-assessment proceedings. 6. We have heard the rival submissions of the parties. We have carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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. Explanation 1. Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso." 7. It is clear from the proviso to section 147 that if the original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y before the Assessing Officer and the assessment was completed under section 143(3). As regards the contention of the ld. D.R. that by virtue of Explana-tion 1, merely because the assessee has produced the books of account and other evidence, that will not necessarily be presumed that there was no failure on the part of the assessee, we do not find any substance in the argument of the ld. D.R. There may be occasion when voluminous transactions may be before the Assessing Officer and just to protect the Revenue in those cases for limited extent, Explanation 1 is added to proviso. We find no infirmity in the order of the CIT(Appeals). In the result, ground No. 2 is rejected. 9. As far as ground No. 3 is concerned, it does not arise f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the disallowance of Rs. 5 lakhs treating it as interest on the tax-free bonds. 13. The assessee carried the matter in appeal before the CIT(Appeals). After examining the provisions of section 14A of the Act, the CIT(Appeals) came to the conclusion that the Assessing Officer was not justified in making the rectification by invoking section 154. The reasons given by the CIT(Appeals) for the above finding are as under : "( iii ) I have considered the objections of the appellant. It is seen that the section 14A was inserted in the IT Act by the Finance Act, 2001 with retrospective effect from 1-4-1962 providing that no deduction shall be allowed in respect of expenditure incurred by an assessee in relation to income which does not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd the rival submissions of the parties. We have also carefully perused the facts of this case. It is not disputed in this case that the original assessment of the assessee was completed under section 143(3) vide order dated 28-3-2000. Section 14A was brought on the statute book vide Finance Act, 2001 with retrospective effect. Subsequently, clarification was made vide proviso to section 14A which was inserted by the Finance Act, 2002 with effect from 11-5-2001. As far as section 14A is concerned, in computing the total income, no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation to the income which does not form part of his total income. Subsequently, proviso was added to section 14A puttin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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