TMI Blog2010 (2) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... r referred to as "the Act") (at annexure D) and also seeking direction against the respondents not to proceed further in pursuance of the said notice. 2. The facts of the case briefly summarized are that the petitioner is a public limited company at Ahmedabad and the respondent is the Assessing Officer, who is entitled under the Act to assess the income of the petitioner for the relevant assessment year 1995-96. The petitioner company submitted the return of income for the assessment year 1995-96 as per the statement of total income, copy of which is at annexure A. The petitioner filed return of income declaring total loss of Rs. 4,54,42,033 and also computed the business loss of Rs. 11,29,45,200 and depreciation of Rs. 89,23,688 to be carried forward to the future years. A note was also annexed forming a part of the return which is stated in detail in the memo of petition. It is averred that the Assessing Officer has passed an assessment order under section 143(3) of the Act dated March 23, 1998 (at annexure B). Thereafter, the Assessing Officer did not accept the submission in the note that the petitioner is not liable to tax in respect of the sale of its undertaking and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that in fact the allow-ance for unabsorbed depreciation against the capital gain is permissible and, therefore, the unabsorbed depreciation under section 32(2) of the past year became the current depreciation for the assessment year 1995-96 under section 71(2) and could be set off against the capital gain, for which reliance has been placed on the judgment of this court in the case of CIT v. Deepak Textile Industries Ltd. [1987] 168 ITR 773 (Guj) and also of the hon'ble apex court in the case of CIT v. Virmani Industries P. Ltd. [1995] 216 ITR 607 (SC). 5. The affidavit-in-reply has been filed by the respondent contending, inter alia, that it is not necessary for the Department to furnish the assessee, the reasons recorded for reopening the assessment along with its notice under section 148 of the Act. It is also contended that the notice under section 148 of the Act has been issued after obtaining necessary approval from the Com-missioner of Income-tax, and as per the provisos of section 149(ii) and (iii), the notice could be issued within the time limit of 10 years, and, therefore, it is very much within the time. It is also stated that the petitioner could have availed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, therefore, the petitioner can-not make a grievance that it is not within the time limit. Again, a reference is made to section 32 of the Act contending that sub-section (2) of section 32 speaks about current depreciation and remaining part which are not given full effect can be added to the amount of allowance for depreciation for the following years subject to the provisions of sub-section (2) of sections 72 and sub-section (3) of section 73. Therefore, it is contended that : "The submission of audited profit and loss account, balance-sheet or notes to the accounts is not sufficient for determination of correct taxable income but the bifurcative details with all classification and nature of expenditure and receipts is absolutely necessary, which are lacking due to paucity of time available and co-operation of the asses-see in general." 8. Further, affidavit-in-reply is also filed by the respondent, again con-tending that the petitioner-assessee-company sold its spinning mills to M/s. Ashima Syntex Ltd. as ongoing concern. However, the sale proceeds of the same were not offered for taxation by the assessee in the statement of total income. The assessee appended the note be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee to make return under section 139 or in response to notice issued under sub-section (1) of section 142 or section 148 of the Act or "to disclose fully and truly all material facts necessary for his assessment, for that assessment year", therefore, learned counsel Mr. J. P. Shah submitted that can it be said that the petitioner-assessee-company is guilty of not disclosing fully and truly all the material and relevant record. He further emphasized referring to the affidavit-in-reply and submitted that as stated in the affidavit-in-reply filed by the respondent it is stated that : "The submission of audited profit and loss account, balance-sheet or notes to the accounts is not sufficient for determination of correct taxable income but the bifurcative details with all classification and nature of expenditure and receipts is absolutely necessary, which are lacking due to paucity of time available and co-operation of the asses-see in general." 11.Learned counsel Mr. Shah pointedly emphasized this aspect and sub-mitted that admittedly the audited accounts were submitted with the notes which clearly reflect and disclose about transfer of an undertaking with unabsorbed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s done in the present case also. He emphasized that as provided in the pro-viso to section 147 of the Act, when there is failure to disclose fully and truly all material facts necessary for the assessment, again he submitted that though the petitioner-assessee may have filed the return with the audited account and the notes, the real crux of the matter is the disclosure made and he referred to the part of the note, which is quoted in the petition with regard to the disclosure and submitted that it was a case with regard to transfer of an undertaking being the spinning mills to M/s. Ashima Syntex Ltd., and therefore, since it was a transfer of an undertaking, it would invite liability of tax as capital gain. He submitted that the petitioner-assessee has omitted the offer of sale consideration of taxation as per the scheme of the Act under the head "Capital gain". He submitted that before the Commis-sioner of Income-tax (Appeals), it was also referred to as "the liability for the short-term capital gain". Learned counsel Mr. Bhat submitted that the claim made by the petitioner-assessee that, even if the undertaking as a whole is considered as a capital asset, no tax liability arises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reply affidavit. Therefore, a perusal of the provisions of section 147 of the Act would make it clear from the language in which it is couched, that after the period of four years, normally when the assessment under section 143(3) of the Act has been made, it would not be allowed to be reopened. However, the word "unless" is used for the purpose of referring to some contingency where it could be reopened subject to fulfilment of the neces-sary requirement as stated therein. In other words, normally, when the assessment under section 143(3) of the Act has been made, it would not be allowed to be reopened unless the criteria provided for allowing such reopening is fulfilled. Thus, from the perusal of the section, it is very clear that as a general rule, normally the assessment is not permitted to be reopened after the period of four years and at the same time, the Depart-ment is not totally deprived of its right and the absolute ban has not been imposed, but such a right to reopen is further qualified subject to the fulfilment of the conditions referred to therein. Therefore, an exception is carved out to enable the Department to have this recourse of reopening after four years s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided in section 143(3). Unless such criteria or conditions are fulfilled, the powers cannot be resorted to. 19. It is admittedly stated that audited books of account like profit and loss balance-sheet along with the notice were submitted and what was necessary was the bifurcative details with all classification and nature of expendi-ture and receipts, which could have been called for by the Assessing Officer, and, therefore, without calling for such record, when there is a specific disclosure in the form of note regarding transfer of an undertaking, specifically stated that the petitioner cannot be said to be guilty of not making full and true disclosure as sought to be canvassed. Reliance placed by Mr. Bhatt on the observations of the hon'ble apex court in the case of Indo-Aden Salt Mfg. and Trading Co. P. Ltd. v. CIT [1986] 159 ITR 624 (SC), is also misconceived as the facts were totally different. In that case, what was sought to be claimed was the depreciation on the masonry work, salt work and the depreciation for the salt work is higher than the masonry work which was sought to be added to the same for getting the benefit of higher depreciation and in that context, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
