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Deputy Commissioner of Income-tax Versus Tata Motors Limited

2008 (5) TMI 608 - ITAT MUMBAI

ITA No. 5368/mum/2005 - Dated:- 8-5-2008 - Order R. S. Syal (Accountant Member).-This appeal by the Revenue arises out of the order passed by the Commissioner of Income-tax (Appeals) on May 26, 2005, in relation to the assessment year 1997-98. The solitary grievance of the Revenue projected through various grounds is against the quashing of the proceedings initiated under section 147. Briefly stated the facts of the case are that the assessment under section 143(3) was completed on March 31, 200 .....

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tax Act, 1961, and excluded compensation received from termination agreement from the profits of the business. 3. The provision for interest under pension scheme and doubtful debts and this should have been added to the total income. 4. The proportionate expenditure on scientific research claimed as deduction was not taken into account to arrive at the correct amount of profit. 5. Expenses/income pertaining to the earlier years debited to the profit and loss account has not been considered. In r .....

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and the total income was determined at Rs. 570.33 crores. In the first appeal, the assessee challenged the validity of notice issued under section 148 on the ground that the original assessment was completed under section 143(3) and the issuance of notice under section 148 on March 28, 2003, with reference to the assessment year 1997-98 was outside the time limit provided in the proviso to section 147. The learned Commissioner of Income-tax (Appeals) concurred with the submissions advanced on be .....

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ge of the proviso in which similar expression any income chargeable to tax has escaped assessment has been employed, the learned Departmental representative contended that Explanation 2(c) should be considered in juxtaposition to the main section while deciding the applicability of proviso. In the opposition, learned counsel for the assessee, while supporting the impugned order, contended that the assessee had furnished complete explanations/details to the Assessing Officer during the course of .....

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ind it apt to note that the assessment year under consideration is 1997-98. The original assessment in this case was made under section 143(3) on March 31, 2000. Notice under section 148 was issued by the Assessing Officer in this case on March 28, 2003. When the provisions of section 149, vis-a-vis, the amount involved, which in the opinion of the Assessing Officer escaped assessment, we observe that prima facie there are no fetters on the powers of the Assessing Officer to make reassessment of .....

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n 148 or to disclose fully and truly all material facts necessary for his assessment. On going through the mandate of this proviso, it is discernible that if the original assessment is made under section 143(3) or 147, then no aid of section 147 can be taken after the expiry of four years from the end of the relevant assessment year unless the conditions referred to in the proviso are fulfilled. There was no failure on the part of the assessee to make return under section 139 or in response to t .....

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e of notice under section 148. It is only if the failure on the part of the assessee to disclose fully and truly all material facts is established, then the Revenue can resort to the reassessment under section 147, otherwise not. At this juncture, we would like to deal with the contention of the learned Departmental representative by which he has referred to Explanation 2(c) in aid of the language in the proviso to section 147 to contend that where assessment has been made but income chargeable .....

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es where income chargeable to tax has escaped assessment, but when these are applied to the proviso to section 147, it is necessary to establish that such escapement of income was only due to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If the view canvassed by the learned Departmental representative is accepted for a moment and given the logical end, it would amount to abating the prescription of the proviso to section 147. The .....

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assessment, the Assessing Officer can resort to making of assessment under section 147. Reasons resulting into underassessment of income are immaterial. But if the original assessment is made under section 143(3) or under section 147, then the reassessment can be done beyond the period of four years from the end of the relevant assessment year only if income escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. .....

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he reassessment proceedings time and again, when he has made a full disclosure of all the material facts necessary for the assessment. In this view of the matter, we are satisfied that the contention raised on behalf of the Revenue is sans merit and is hereby repelled to the extent that Explanation 2(c) is mandatorily required to be considered notwithstanding the proper disclosure made by the assessee at the time of original assessment, when the period of four years from the end of the relevant .....

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Officer has not made any addition on this count and hence this reason is not sustainable for issuing notice under section 148. The second reason is the omission of sales-tax and exclusion of compensation received from termination agreement from the profits of the business for allowing deduction under section 80HHC. Here again, we find that the assessee had made disclosure of the sales-tax collected and the compensation received from termination agreement in the return of income filed by it. It i .....

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e face of the record in so far as the making of the provision is concerned and only on having a relook at the profit and loss account, that the Assessing Officer opined that it was liable to be added. Hence, in so far as the assessee is concerned, it made complete and true disclosure. The fourth item is against the deduction on account of proportionate expenditure on scientific research. This point was considered by the Assessing Officer for initiating reassessment. However, during the course of .....

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