TMI Blog2008 (5) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer on the following five counts : " 1. It was noticed that the assessee had not included customs duty payable as on March 31, 1997, in respect of goods lying in bonded warehouse of Rs. 5.58 crores in the valuation of closing stock. 2. Sales-tax collection were omitted while arriving at total turnover for the purpose of allowance of deduction under section 80HHC of the Income-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment is made, that would be covered within the deeming provision of cases " where income chargeable to tax has escaped assessment" . Referring to the language 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 original assessment proceedings under section 143(3) and there was no failure on its part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the notice under section 142(1) or under section 148. Thus, this set of conditions is not applicable. Coming to the last stipulation, being the failure to disclose fully and truly all material facts necessary for the assessment, it is required to be seen as to whether the assessee was successful or not in disclosing fully and truly all m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 line of distinction between the general cases of income escaping assessment and those provided in the proviso, is that whereas in the general cases there may be any reason for attracting the provisions of section 147 when the income chargeable to tax has escaped assessment in terms of Explanation 2, that is, it may be due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment or otherwise. It means so long as the income is escaping assessment, the Assessing Officer can resort to making of assessment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to the facts of the case, now we need to examine as to whether the points raised by the Assessing Officer, which led to the issuance of notice under section 148 as extracted above, fall within the domain of the " full and true disclosure of all material facts" by the assessee necessary. First issue is non-inclusion of customs duty of Rs. 5.58 crores in the valuation of closing stock. It is seen that the Assessing 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and it cannot be said that they were not properly disclosed. Rather the Assessing Officer got a clue to issue notice on this point only after going through the profit and loss account, which contained the debit of such expenses. Thus, it can be easily seen that none of the points, in respect of which the Assessing Officer issued notice under section 148, fall within the ambit of the expression " failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment" . These reasons may be germane to and result in the underassessment but cannot guide the Assessing Officer to issue notice under section 148 after the expiry of four years from the end of the relevant assessment year, when he had alr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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