TMI Blog2009 (9) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... hese two appeals by the assessee were heard together and are being disposed of by this common order for the sake of convenience. 2. Ground No. 1 of ITA No. 1832/Ahd/2009 reads as under: "1. The order passed by the learned CIT under s. 143(3) r/w s. 147 of the IT Act, 1961 is bad in law and on facts. 1.1 The appellant submits that there is no omission on the part of the appellant to furnish and/or disclose the material necessary information for the completion of original assessment. It is well-settled law that when the primary facts necessary for assessment are fully and truly disclosed, the AO will not be entitled to commence proceedings for reassessment. 1.2 The appellant, therefore, prays that the order passed under s. 143(3) r/w s. 147 of the IT Act, 1961 deserves to be quashed." 3. Briefly stated, the facts of the case are that the assessee, a company in which public are substantially interested, is engaged in the business of investment in movable and immovable properties since last several years. The AO completed the assessment under s. 143(3) of the IT Act, 1961 (in short 'the Act') on 12th March, 1998 determining the total income at Rs. 17,87,790. Thereafter, notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above, it is also submitted that the matter relating to the said interest had already been clarified by way of note to the annual accounts for the year under consideration. Thus there is no omission on the part of our client to furnish and/or disclose the material necessary for the completion of original assessment." The AO did not accept the above reply of the assessee and recomputed the total income by making addition on account of earlier years expenses amounting to Rs. 15,30,000. 4. Aggrieved by the order of the AO, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A) , the assessee challenged the assessment order passed under s. 143(3) r/w s. 147 on the ground that same is bad in law as there was no omission on the part of the assessee to furnish or disclose the material necessary for completion of the assessment. 5. The CIT(A) rejected the ground of appeal observing as under: "3.3 I have considered the submission made by the appellants and the observation of the AO. The original order under s. 143(3) was passed on 12th March, 1998 whereas the notice under s. 148 was issued on 20th March, 2002 and the same was served upon the assessee on 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 148 on 20th March, 2002 was after the expiry of four years from the end of the relevant assessment year. According to the learned counsel for the assessee in the instant case, assessment year ended on 31st March, 1996 and, therefore, the notice issued under s. 148 on 20th March, 2002 was beyond the period of four years from the end of the assessment year. 6.1 As regards validity of reopening, Shri J.P. Shah, the learned counsel for the assessee submitted that during the year under consideration, the assessee company had booked total interest expenses of Rs. 39,25,919 which included interest expenses of Rs. 15,30,000 pertaining to asst. yr. 1994-95 as the same was crystallized in the asst. yr. 1995-96 and was provided in the year under consideration. This fact was also disclosed in the notes to account by way of disclosure in note No. 9 in Part B to the notes to the accounts. He further submitted that during the course of original assessment, the details in respect of interest payable on deposit were also furnished vide letter dt. 18th Feb., 1998. In the said letter, it was clearly submitted in the form of a Table, that details of interest and the interest provided include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year ended on 31st March. 1996 and, therefore, the notice issued on 20th March, 2002 under s. 148 was served upon the assessee on 28th March, 2002 was beyond four years from the end the assessment year. 6.1 As regards the validity of reopening, we find that during the year under consideration, the assessee company had booked total interest expenses of Rs. 39,25,919 which included interest expenses of Rs. 15,30,000 pertaining to asst. yr. 1994-95 as the same was crystallized in the asst. yr. 1995-96 and was provided in the year under consideration. This fact is clear from the notes to account by way of disclosure in note No. 9 in Part B to the notes of the accounts which reads as under: "(9) The interest and finance charges aggregating to Rs. 39,25,919, inter alia, include interest pertains to earlier year accounting to Rs. 15,30,000." We also find that during the course of original assessment, the details in respect of interest payable on deposit were also furnished vide letter dt. 18th Feb., 1998 which reads as under: "(4) Interest payable on deposits Rs. 44,06,629: Amount (Rs.) Interest payable to Gokrna In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also clearly making full disclosure to the interest including interest of Rs. 15,30,000 pertaining to the asst. yr. 1994-95. 9. Now, we will examine the relevant provisions of law. Proviso 1 to s. 147 reads as under: 147. If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of ss. 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in ss. 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-s. (3) of s. 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the proviso to s. 147 of the Act. 10.3 In the case of Haryana Acrylic Manufacturing Co. vs. CIT Anr. (2008) 220 CTR (Del) 450 : (2008) 15 DTR (Del) 274 : (2009) 308 ITR 38 (Del), the Hon'ble Delhi High Court held that there being no whisper in the reasons supplied to the assessee that income escaped assessment by way of reason of assessee's failure to make full and true disclosure of all material facts necessary for notice under s. 147 issued beyond four years from the end of the relevant assessment year was barred by limitation under proviso to s. 147, hence without jurisdiction. 10.4 In the case of Krishna Metal Industries vs. H.M. Algotar, Asstt. CIT (1997) 140 CTR (Guj) 200 : (1997) 225 ITR 853 (Guj), the Hon'ble High Court held that assessment having been made under s. 143(3) and there being no allegation in the notice under s. 148 that assessee has failed to make full and true disclosure; notice under s. 148 issued beyond four years from the end of the relevant assessment year was barred by limitation. 10.5 In the case of Avani Corporation vs. ITO (1999) 155 CTR (Guj) 548 : (1999) 238 ITR 407 (Guj), the Hon'ble High Court held that initiation of proceedings und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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